The Openpay Group Ltd (ASX: OPY) share price jumped 3.0% higher yesterday but is the buy now, pay later (BNPL) share a good buy?
Why the Openpay share price is surging
I think a lot of the recent share price movements have less to do with Openpay and more to do with the broader market.
US tech stocks have been volatile in recent weeks and we've seen the same for Aussie tech and BNPL shares. The Openpay share price is now down 22.7% since 1 September but has recovered 11.9% this week.
Of course, the BNPL share is still up 150% for the year to $3.10 per share having hit an all-time high of $4.98 per share in late August.
There is something of a mania going on in ASX BNPL shares. You only have to look at rival Afterpay Ltd (ASX: APT) to see just how badly investors want to buy in.
To be fair, while the price to earnings (P/E) ratios are eye watering, recent capital gains have been underpinned by strong growth profiles.
Openpay's full-year result contained plenty of good news for long-term investors. That included a successful expansion into the UK, a new Business to Business (B2B) offering with Woolworths Group Ltd (ASX: WOW) and strong local market growth.
The number of active plans jumped 229% to 824,000 with 141% more active customers and total transaction values up 98% to $192.8 million.
Openpay's revenue jumped 64% to $18.0 million despite posting a 155% increase in its net loss after tax to $36.5 million.
Is the BNPL share a cheap buy?
For all of the positive growth signs, the Openpay share price may be a touch expensive.
I do like that it's now down 22.7% in September but it feels like a lot of potential growth is baked into the current valuation. The group now has a market capitalisation of $334.4 million but I'd like to see some more cash generation.
However, if you're deadset on buying BNPL shares, Openpay could be a good option. I do think it has a solid growth strategy but has some way to go before catching established rivals like Afterpay or Zip Co Ltd (ASX: Z1P).
If the Openpay share price were to dip below the $3 per share mark, I think I'd have to consider buying in.
