Openpay (ASX:OPY) share price slides despite positive quarterly update

The Openpay Group Ltd (ASX: OPY) share price can’t seem to catch a break even after posting a positive March quarter update

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The struggling Openpay share price is looking to make up for lost ground after announcing a positive third-quarter update

Leading buy now pay later (BNPL) rivals such as Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have likely stolen the spotlight with dual listing plans and continued international expansion. The Openpay Group Ltd (ASX: OPY) share price has been left behind, stumbling 10% year-to-date to an 11-month low last week.

The company has approached this quarter with a sense of gravity, saying:

Openpay continues to move with urgency to capture market opportunity and disrupt major payments markets with its highly relevant and transparent offering for merchants and consumers.

But will this be enough to please the market? 

Third-quarter highlights 

Openpay delivered an uplift across leading indicators in the third quarter following a very strong second quarter.

The company’s total transaction value (TTV) increased 80% on the prior corresponding period (pcp) to $83 million. Its revenue had also increased 24% against the pcp to $6.6 million. Additionally, with an improved revenue yield of 7.8% from the 7.5% in 2Q21. 

The number of active plans increased to 1.7 million. This is up 185% on the prior corresponding period and up 19% quarter-on-quarter (QoQ). Its active customers doubled from a year ago to 505,000 and up 10% QoQ. Given the priority placed on the UK market, half the company’s customer base now comes from the UK. 

Openpay continues to drive merchant sign-ups. In particular, with active merchants up 70% on the pcp and an impressive 24% QoQ to 3,400. In Australia, key agreements were signed with leading brands such as Officeworks and Ford. Additionally, Openpay entered the hospital sector with St John of God Health Care. 

To add some perspective, rivals Zip delivered a 12% QoQ improvement in customers and an 18% increase in merchants in its third quarter update two weeks ago. Its shares surged some 15% on the day of the announcement but has since lost the entirety of its gains.

On the flip side, Splitit Ltd (ASX: SPT) recorded a slight quarter on quarter decline in revenues, falling from US$2.9 million to US$2.7 million in its first-quarter update. Its shares slipped 5% on the day.

Overall, it looks like the market has shrugged off the company’s achievements. At the time of writing, the Openpay share price down 1.88% to $2.09.

What will drive the Openpay share price? 

The Openpay share price is eyeing a number of growth initiatives to drive shareholder value and revenue growth. 

Openpay entered the US$55.8 billion US and UK healthcare channel in March. This was in partnership with cloud-based veterinary Practice Management Software platform, ezyVet. 

The company believes there is a significant market opportunity in the US to carve out its niche in higher-value, longer-term plans. By servicing strategy target verticals such as healthcare, home improvement, and education, Openpay believes it can address the current gaps in the BNPL market in the US. 

With the lack of share price traction for smaller BNPL shares, Openpay will need to put its best foot forward to get out of its recent slump. 

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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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