The hype surrounding South East Asia's next buy now pay later (BNPL) provider, IOUpay Ltd (ASX: IOU) saw its share price surge as high as 250% this year. But in an unexpected turn of events, the IOUpay share price suddenly slumped. Down from 61 cents to 37 cents, or a decline of 40% in March.
Why the IOUpay share price underperformed in March
Broader weakness for tech and BNPL shares
Rising bond yields and broader market volatility made it a challenging month for the tech sector. This resulted in diverging performance between the S&P/ASX Information Technology (INDEXASX: XIJ) index which fell 5.80%, compared to the flat ASX 200.
Such weakness may have resulted in the IOUpay share price swimming against the tide despite key milestones including partnering with EasyStore to provide BNPL services, a merchant referral agreement with iPay88 and an expansion of its leadership team.
By comparison, large cap BNPL shares also faced heavy selling pressure with the likes of Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) falling a respective 20% and 33% in March.
What's next for the IOUpay share price?
Eyes on revenue growth with new BNPL services
IOUpay strives to become one of the leading digital transaction processors in South East Asia. This involves providing value add services such as smart short term revolving BNPL instalment offerings. In addition to services such as bill payments, mobile banking transactions, and digital commerce.
The company's partnership with EasyStore resulted in a significant re-rate in valuation. This saw the company transform from a market capitalisation of approximately ~$90 million to $210 million. All eyes will be on the company's ability to grow key BNPL metrics. In particular, gross merchandise value, customers, and merchants.
Tailwinds in the SEA market
IOUpay has taken the first-mover advantage for BNPL in the SEA region. The company believes it can leverage its market-leading position for secure transaction and payment processing operations and existing customer data for rapid customer acquisition. This is further supported by its views on the SEA market:
The "Sweet Spot" for BNPL is larger in SEA due to the lack of consumer credit and underbanked populations overlaid with mobile population levels and the ever increasing growth in e-payments which facilitate BNPL offerings and adoption rates.