Stock in the embattled BNPL company last traded on 31 January, when it closed down 7% for the day. Over the previous 12 months, the Openpay share price had fallen 58%.

What happened with Openpay?

Like most ASX BNPL shares, Openpay stock rocketed higher in the early months of the market's meteoric pandemic rebound. But it failed to hold those late 2020 highs and came under increased pressure as interest rates began to ratchet higher in mid-2022.

As The Motley Fool reported last Friday, Openpay looked to be having difficulties accessing its $41 million unused finance facilities, leaving the loss-making company with a balance of $17 million. That's notably less than the $18 million of cash burn during the last reported quarter.

On Monday, Openpay revealed that receivers had been called in.

At the time of writing, the Openpay platform is not enabling any new purchases, and its shares remain suspended.

Are other ASX BNPL shares at risk of going down the same path?

The question investors are pondering now is, what's the outlook for companies operating in the same sector, with a similar business model?

For some insight into how the sector had been performing, here are the share price returns over the past 12 months from some of the top ASX BNPL names:

• Shares in Block Inc (ASX: SQ2), which acquired Afterpay in January last year, are down 16%
• Zip Co Ltd (ASX: ZIP) shares are down 78%
• Sezzle Inc (ASX: SZL) shares are down 72%
• Splitit Payments Ltd (ASX: SPT) shares are down 2.5%

The standouts here are Splitit and Block.

Both ASX BNPL shares are in the red over the full 12 months, but not nearly as deeply as the rest.

While I don't have a functional crystal ball, the stocks that have lost close to, or more than, three-quarters of their value over the past year certainly appear to be in danger of following Openpay into receivership.

The stronger performers may well shake off the past year's malaise to shine brightly once more.

What the industry insiders are saying

Splitit CEO Nandan Sheth says his company's business model differs from most in that it makes use of credit from its customer's credit cards. It also transacts with the vendors rather than the buyers.

As reported by The Australian, Sheth said he wasn't surprised to hear that the first ASX BNPL share had entered receivership.

"When you're lending to subprime consumers with a very high write-off rate – in some cases 300 to 400 basis points of write-offs – and a super-high customer acquisition cost along with marketing costs, your path to profitability is going to be challenged," he said.

He also pointed to difficulties in selling the long-term story of the stock to new investors, squeezing out access to new capital.

 "To be very candid, I'm not surprised that this is happening," Sheth added. "I think we will see more consolidation in this space and we're going to see buy now, pay later players focus on profitability."

ASX BNPL sector a huge boon to Aussie economy

But don't go counting the ASX BNPL sector out just yet.

According to the Australian Finance Industry Association (courtesy of The Australian), the buy now, pay later industry contributed north of $18 billion to Australia's GDP. AFIA estimates there are 6.3 million Aussie BNPL customers.

"BNPL is low cost and low risk, the average BNPL transaction value is $136," AFIA chief executive Diane Tate said. "Consumers are able to save in interest and fee costs (relative to other financial products) and surcharge savings. Delaying payment allows for more effective budgeting."

While he believes not all of the current ASX BNPL shares will endure, Sheth does envision a strong future for the sector.

"Buy now, pay later is ultimately going to be a model that is very successful. And I squarely believe that Splitit is not going to be the only company that's in the market," he said.

The post Are other ASX BNPL shares at risk of going down the same path as Openpay? appeared first on The Motley Fool Australia.

This morning, the embattled buy now pay later (BNPL) provider made a very troubling announcement.

What's going on with the Openpay share price?

Last week, Openpay revealed that it was having problems getting hold of its $41 million unused finance facilities.

It appeared to indicate that the financiers weren't overly keen to put this money up due to its abject financial performance and fear that it would essentially be money down the drain.

Unfortunately, this left the company with a balance of $17 million, which is less than it burned through during the fourth quarter of calendar year of 2022.

Worse still, it meant that Openpay has breached the covenants of loan agreements with senior secured lenders.

And while management advised that constructive discussions were underway with its senior secured lenders, this seems to have amounted to nothing and receivers have now been called in.

Receivers called in

According to the release, Barry Kogan, Jonathan Henry, and Rob Smith, partners of McGrathNicol were appointed joint and several receivers and managers of Openpay at the weekend.

These appointments mean that the receivers and managers are now in control of assets, operations, and trading activities of the company.

And while they are working urgently to determine the appropriate strategy for the business, it doesn't look good. The release notes that at this time, customers will no longer be able to use the Openpay platform for new purchases. Though, they are still required to pay any outstanding balances in accordance with their existing agreements.

As for the Openpay share price, it will remain suspended until further notice while the assessment of the appropriate strategy is ongoing. A further announcement will be issued in this regard when the time is right.

The post BNPL share Openpay collapses, receivers called in appeared first on The Motley Fool Australia.

This morning, the embattled buy now pay later (BNPL) provider requested that its shares remain suspended.

What's going on with this ASX BNPL share?

Unfortunately for its shareholders, there's a reasonable possibility that Openpay could never trade on the ASX again.

According to its suspension request, the non-payment of the company's utilisation notice by 31 January means that Openpay has breached the covenants of loan agreements with senior secured lenders.

Management has advised that constructive discussions are underway with its senior secured lenders, and a sub-committee of non-conflicted directors anticipate that negotiations will allow the company to make an announcement and end the suspension.

What's the issue?

Openpay ended the last quarter with a cash balance of approximately $17 million after burning through $18 million of cash during the three months.

Clearly, if it were to do the same in the current quarter, it would run out of money.

However, the company has unused finance facilities of $41 million, which would boost its total available funding to $58 million. This would give it 3.19 quarters of funding according to its cash flow report.

The issue is getting hold of these funds. No explanation has been provided, but it appears as though its financiers aren't overly keen to put this money up. Which is understandable given how far away Openpay seems to be from becoming profitable. If it ever will be.

All in all, it wouldn't be overly surprising if this ASX BNPL share follows the lead of Laybuy Group Holdings Limited (ASX: LBY) and delists from the Australian share market in the near future given the sad state it is in.

The post Could this BNPL share be wiped from the ASX? appeared first on The Motley Fool Australia.

After a difficult Q1, here's how these four buy now, pay later stocks have performed so far in Q2 (since the closing bell on 30 September):

• Openpay Group Ltd (ASX: OPY) shares are up 5.6%
• Zip Co Ltd (ASX: ZIP) shares are down 8.0%
• Sezzle Inc (ASX: SZL) shares are flat
• Block Inc (ASX: SQ2) shares are up 5.6%

For some context, the All Ordinaries Index (ASX: XAO) is up 2.7% over this same period.

How have ASX BNPL shares performed heading into the new quarter?

ASX BNPL shares have had a year to forget, so far.

The companies' share prices have all gotten absolutely hammered as investors awoke to the reality that inflation wasn't transitory, and interest rates across most of the developed world were heading sharply higher.

After posting some truly phenomenal gains in the year-plus following the pandemic recovery trade (commencing late March 2020), things began to slow down for ASX BNPL shares by mid-2021.

As for 2022, here's how the same four companies have performed to date, over a period that has seen the All Ordinaries tumble 13%:

• Openpay Group Ltd (ASX: OPY) shares are down 74.0%
• Zip Co Ltd (ASX: ZIP) shares are down 85.3%
• Sezzle Inc (ASX: SZL) shares are down 84.3%
• Block Inc (ASX: SQ2) shares are down 49.2%*

See what we mean by a year to forget.

(*Note, Block commenced trading on the ASX on 20 January this year following its successful acquisition of Afterpay.)

Well, those are the quarters gone by.

So, what's next?

What to expect in the quarter ahead?

When talking about ASX BNPL shares, it's important to remember we're taking a broad-stroke approach to the sector here.

Each company has its own management team, different balance sheets, and its own specific market strengths, weaknesses, and potential growth outlook.

With that said, investors in ASX BNPL shares would do well to keep an eye on the outlook for inflation and any resulting rate hikes. Not just from the RBA here in Australia. But, even more importantly, from the US Federal Reserve.

As mentioned, the dismal share price performance of buy now, pay later companies over the first three quarters of the calendar year was largely driven by soaring inflation and hawkish tightening from central banks across much of the world.

ASX BNPL shares are more vulnerable to rising interest rates than many stocks for several reasons.

First, many of them have high debt levels. And as rates rise, the cost of servicing that debt rises as well.

Second, higher rates (and inflation) put greater pressure on their customer base. Sure, a greater number of cash-strapped customers may be tempted to use BNPL services to delay paying for their purchases. But the BNPL companies can expect the number of clients who fail to make those repayments also rise alongside the tougher economic environment.

And third, ASX BNPL shares are largely priced based on forecast future revenues. Those revenues may indeed eventuate. But higher interest rates increase the present cost of those future earnings.

With that in mind, tomorrow's Consumer Price Index (CPI) figures due out of the US should offer some early indication as to the outlook for these companies in Q2.

If inflation in the world's top economy comes in below consensus expectations, ASX BNPL shares should receive some welcome tailwinds amid hopes of a less hawkish Fed.

The post After a horror year, what's next for ASX BNPL shares in the new quarter? appeared first on The Motley Fool Australia.

The Openpay share price raced out of the gates this morning, soaring 13.9% when the market opened.

But the ASX BNPL share has since run out of steam, printing a 2.8% gain at the time of writing.

Openpay share price rises on mixed full-year results 

Here are some of the key numbers from Openpay's Australia and New Zealand (ANZ) operations in FY22:

• Record total transaction value (TTV) of $344 million, up 49% year on year (YOY)
• Revenue of $26.3 million, up 30% from $18.8 million in the prior year
• Active merchants of 4,100, up 9% YOY from 3,700
• Active customers of 321,000, up 35% YOY from 265,000
• 65% of active customers had multiple plans, up from 57% in the prior year 
• Active plans of 1.8 million, up 50% YOY from 1.2 million

Turning to unit economics, the company's revenue margin continued its backwards trend, albeit at a decelerating rate, falling from 8.2% in FY21 to 7.7% in FY22. 

Openpay's revenue margin is its revenue as a percentage of TTV. In other words, it represents how successfully the company can convert the transaction value that flows through its platform into revenue. 

For comparison, competitor Zip Co Ltd (ASX: ZIP) recently reported a revenue margin of 7.1% in FY22.

Despite the fall in revenue margin, Openpay managed to keep its net transaction margin stable at 2.9% as cost of sales grew at a slower rate than operating income.

Meanwhile, the company's net bad debts marginally reduced to 1.6% of TTV.

On the bottom line, Openpay's net loss ballooned from $63.1 million in FY21 to $82.5 million.

What else happened in FY22?

In January, Openpay announced a significant reduction in its UK operations. At the time, the company said it was instead turning its focus to ramping up its US presence and accelerating towards profitability in ANZ. Investors cheered this decision, sending the Openpay share price soaring.

In May, Openpay tapped the market for more capital, completing an $18.25 million placement.

Then, in July, the company announced it was pausing its existing US operations indefinitely and ceasing loan originations on its US platform.

Openpay had been on the hunt for potential investors in the US to provide the capital required to scale its early-stage US operations.

In the end, the company said the current macroeconomic and public market conditions led to a change in strategy.

Openpay will continue to look for commercialisation opportunities for both its UK and US platforms. But at this stage, it will not be using them for loan originations.

As a result, the company has simplified its operations, freeing up capital to support an even greater focus on its core ANZ market.

Across the year, Openpay reported a daunting $81.2 million in net operating cash outflows. This is far greater than the company's cash balance of $10.3 million at the end of FY22. But it will receive a $17.5 million boost when the proceeds from its capital raising come through.

But in a sign of possible greener pastures, the company expects its simplified business will generate positive net operating cash flow by June 2023.

What did management say?

Commenting on the results, Openpay CEO Dion Appel said:

During and shortly after FY22, Openpay rapidly responded to changes in the equity market and macroeconomic environment and simplified its business model.

These decisions enabled laser beam focus on Australia, our most mature market, and the one closest to delivering cash profitability.

​​The simplification strategy has resulted in a leaner and more efficient business where cost synergies will continue to flow into 2023, alongside the momentum of stronger performance, industry leading margins and unit economics and improved bad debts and arrears.

What's next?

Management refrained from issuing forward guidance and didn't provide much commentary about the year ahead.

The outlook slide in today's investor presentation simply stated it is committed to delivering cash EBITDA profitability in ANZ by June 2023.

This will be driven by TTV growth across the company's key verticals, an enhancement in its product suite to support unit economics, and its simplified business structure.

Openpay share price snapshot

Despite making a resurging comeback in July, the Openpay share price has been battered and bruised this year.

The Openpay share price has nearly been cut in half over the last six months. And it's suffered a steep 75% fall since the beginning of the year.

As a result, Openpay's market capitalisation has shrunk to $43 million.

The post Openpay share price bounces despite losses amplifying in FY22 appeared first on The Motley Fool Australia.

Openpay shares also spent much of the day in the red, finishing 3.13% lower at 31 cents a share. The ASX buy now, pay later (BNPL) share dropped as low as 28 cents a share earlier in the day. All up, it means Openpay shares have now lost a painful 40% since hitting 52 cents a share last Friday.

But rather perplexingly, the Openpay share price still remains up by close to 24% over the past five trading days. That's even after the big falls we have seen since Friday.

This is largely thanks to the massive near-50% move we saw last Thursday. Indeed, between Monday and Thursday last week, the Openpay share price more than doubled from 24 cents to 50 cents.

The jaw-dropping share price move we saw on Thursday seemed to have been sparked by the release of Openpay's quarterly update. This covered the three months to 30 June 2022.

As we covered at the time, the BNPL company reported a pleasing 50% increase in the number of active plans to 1.8 million for the quarter over the prior corresponding period. Active customers also rose by 21% to 321,000.

Total value transaction was also up significantly, rising by 54% to $97.6 million. Revenues also came in strong, with Openpay recording a record $8.5 million, up 80% over the prior period.

Why has the Openpay share price tanked 40% in three days?

So obviously investors were driven into a frenzy with these numbers. But it seems that many have since had a rethink. Openpay has not given any additional news or updates to investors since this report. So 'cold feet' is the most likely explanation for Openpay's more recent share price woes.

Despite the massive share price movements we saw last week, Openpay shares remain down by almost 60% in 2022 thus far. At its current share price, this ASX BNPL share has a market capitalisation of just over $48 million.

The post The Openpay share price has cratered 40% in 3 days. What's going on? appeared first on The Motley Fool Australia.

The lending and payments fintech said it had "delivered another record-breaking quarter with market-leading margins and low bad debts".

The Openpay share price opened Thursday's session at 46 cents and quickly ascended to 52 cents. That's 53% above its previous closing price. It is now trading at 45 cents, up 33%.

Openpay share price flies on record results

The highlights for the June quarter are as follows:

• 1.8 million active plans, an increase of 50% on the previous corresponding period (pcp) of Q4 FY21
• 321,000 active customers, an increase of 21% pcp
• More than 4,100 active merchants vs. 3,700 in Q4 FY21
• Record total value transaction (TTV) of $97.6 million, an increase of 54% pcp
• Total quarterly revenue a record $8.5 million, up 80% pcp
• 8.1% revenue margin, up from 7.3% pcp
• 3.4% net transaction margin (NTM), up from 2% pcp
• (1.1%) net transaction loss (NTL), up from (1.5%) pcp
• 1.1% arrears, down from 1.9% pcp
• 1.5% net bad debts, down from 2.3% pcp

What else happened in FY22?

Openpay said its OpyPro platform attracted a record-breaking 6,000 new accounts in the June quarter. That's a 114% bump on the pcp. The platform's total transaction value was $16.6 million, up 463% pcp.

In January 2022, Openpay sought to simplify its business by withdrawing from the UK market. More recently, it has announced its withdrawal from the US market. This means it will continue operating in these countries but will no longer proactively invest in its broader development there.

The company argues that this will enable it to accelerate its pathway to profitability in Australia.

Moving forward, Openpay said it will continue to look for commercialisation opportunities for its US and UK platforms "in a capital-light manner".

What did management say?

Openpay CEO Dion Appel said:

This last quarter saw Openpay take some further tough but important decisions which has allowed the Company to focus on its core operating platform in Australia (across both B2C but also B2B via
OpyPro).

As these quarterly results highlight, the ability to focus our capital, people and strategy on Australia (which has always been our home market) versus multiple jurisdictions is delivering the outcomes we are seeing in the continued growth in TTV and revenue, the strength of our gross and net margins (arguably the strongest in our peer set), whilst at the same time continuing to deliver and improve our extremely low arrears and bad debts.

We will continue to optimise the business on an ongoing basis as well as look for opportunities to accelerate to profitability should they present themselves.

What's next?

Openpay is hoping to deliver cash profitability in Australia by June 2023.

In its statement, Openpay said it "remains focused on delivering its targeted approach of larger lends over longer periods of time".

It says this strategy has consistently resulted in market-leading margins and low net bad debts.

Openpay share price snapshot

The Openpay share price has fallen 42% in the year to date.

This is a larger fall than the S&P/ASX All Technology Index (ASX: XTX), which is down 29% year to date.

The post Openpay share price explodes 33% on 'record-breaking quarter' appeared first on The Motley Fool Australia.

Since last Wednesday, shares in the buy-now, pay-later (BNPL) company were trading as low as 20 cents a pop.

Today, these shares are now fetching for 31 cents – up 21.57% for the day.

This represents a gain of 55% over the past week for those lucky shareholders who decided to buy in.

Let's take a look at what could be boosting the company's share price.

What's driving the Openpay share price higher?

Investors are also bidding up Openpay shares following strong market moves in the sector today.

BNPL peers, Zip Co Ltd (ASX: ZIP) and Splitit Payments Ltd (ASX: SPT) are up 15.61% and 5.5%, respectively.

With no announcements from either company, it appears short sellers could be closing out their positions as investor confidence ramps up.

In addition, news that Openpay is expanding its services into other markets is also providing support.

According to the Wall Street Journal, Openpay is looking to enter the healthcare sector to combat the global economic slowdown.

As consumer spending tightens up, the first industry to be impacted is likely discretionary purchases such as shopping for clothes.

However, in a bid to boost revenue and ensure survival in a gloomy economic environment, Openpay is pivoting towards payment plans for medical procedures. This is because consumers are more inclined to spend on healthcare treatments such as dentistry or other frequently needed services.

Minimising credit risk has become a top priority for BNPL providers as bad debts continue to rise across the industry.

But by servicing the healthcare market, payment instalments can be linked to a patient's continued treatment plan. In essence, it is less likely that a person will miss a payment as they have an ongoing relationship with the healthcare provider.

Openpay share price snapshot

Despite rocketing this week, the Openpay share price has a long way to go to recover its losses in 2022, down 55%.

Its shares reached an all-time low of 12 cents on 30 June, before rebounding to a two-month high.

Based on today's price, Openpay presides a market capitalisation of roughly $35.61 million.

The post Why is the Openpay share price up 55% in a week? appeared first on The Motley Fool Australia.

Zip's CEO and co-founder Larry Diamond was warned eight months ago that there was trouble ahead for the buy now, pay later (BNPL) sector, according to reporting in the Australian Financial Review.

The warning was issued following a meeting at Morgan Stanley. The investment bank believed the BNPL sector was about to be hit by rising interest rates and surging inflation.

Zip's share price fall won't surprise some

The prediction looks prescient in today's environment. Zip shares tumbled 21.42% this morning to 49.5 cents. That's the lowest the share price has been since 2016.

Diamond reportedly called Zip's other co-founder in Sydney, Peter Gray, and told him the grim news. He said, "there are some clouds gathering on the horizon". He also said they needed to shift their thinking from global expansion to self-preservation.

BNPL shares facing multiple challenges

Once a darling ASX share, Zip and its peers are now facing multiple challenges. Central banks around the world, including the Reserve Bank of Australia, are rapidly lifting interest rates and tightening liquidity.

This global trend created four big headaches for ASX BNPL shares in one fell swoop. Rising interest rates mean higher costs of funding for all companies. But it hits BNPL players harder due to their need to fund their interest-free payment offering in a business than generates slim margins.

The second issue is bad debt. As rates rise and the economy inevitably slows, more consumers are at risk of defaulting on payments.

Squeezed from all sides

Meanwhile, even BNPL users in a healthier financial position will likely be tempted to cut back on spending. We are already seeing consumer sentiment take a hit from higher rates and cost of living pressures.

Finally, higher rates are bad news for ASX growth shares. They tend to suffer most as the risk-free rate rises. As we have seen, this derating is most pronounced among ASX tech shares and BNPL shares.

Zip shares aren't the only ones on the nose

It isn't only the Zip share price that's crashed. The Block Inc CDI (ASX: SQ2) share price, Splitit Ltd (ASX: SPT) share price, and Openpay Group Ltd (ASX: OPY) share price have also been pummelled.

The bad news doesn't end at higher interest rates, either. Growing competition from much larger and better-resourced companies is threatening to overtake these industry pioneers.

National Australia Bank Ltd (ASX: NAB) is the latest ASX big four bank to start offering a BNPL service. Then we have tech giants like Apple Inc (NASDAQ: AAPL) joining the fray.

Last man standing?

The BNPL industry is likely to endure more volatility.

When Afterpay was acquired by Block Inc (NYSE: SQ) in January, Zip became the largest BNPL share on the ASX.

At the time, Zip shares were trading above $3. Today, Zip shares are down 88% year to date.

The post Own Zip shares? CEO warned co-founder 8 months ago, 'There are some clouds gathering on the horizon' after Morgan Stanley meeting appeared first on The Motley Fool Australia.

Four ASX shares that are falling more than most today are listed below. Here's why they are sinking:

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is down over 4% to $3.58. This follows the release of the fertiliser and commercial explosives manufacturer's half-year results. Incitec Pivot reported a 48% increase in revenue to $2,548 and a record half-year profit of $384 million. As strong as this was on paper, its earnings still fell short of consensus estimates.

Openpay Group Ltd (ASX: OPY)

The Openpay share price is down 10% to 26.5 cents. The catalyst for this was the completion of a placement of shares to sophisticated and institutional investors. Openpay has raised $18.25 million from the placement at an 18.6% discount of 24 cents per new share. It will now seek to raise a further $2 million from retail shareholders at the same price. These funds will be used to accelerate the buy now pay later provider's pathway to profitability in the ANZ market.

PolyNovo Ltd (ASX: PNV)

The PolyNovo share price is down 7% to $1.23. As I mentioned here earlier, short sellers have been increasing their positions in this medical device company despite its chairman loading up on shares this month. They appear to believe the company's underperformance will continue this year.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is down 18% to 23 cents. Investors have been selling this lithium explorer's shares following the release of a disappointing pre‐feasibility study for the North American Lithium operation in Canada. That study found that the project has a pre‐tax net present value of A$1 billion, which was lower than many were expecting. It also uses long run spodumene price inputs well ahead of what analysts at Goldman Sachs are forecasting.

The post Why Incitec Pivot, Openpay, PolyNovo, and Sayona Mining shares are sinking appeared first on The Motley Fool Australia.

In afternoon trade, the buy now pay later (BNPL) provider's share are down 13% to a new low of 25.5 cents.

This means the Openpay share price has now lost two-thirds of its value in 2022.

Why is the Openpay share price sinking?

The Openpay share price is under pressure today after the company completed a placement of shares to sophisticated and institutional investors.

According to the release, Openpay has raised $18.25 million from the placement at an 18.6% discount of 24 cents per new share.

The release explains that Openpay received cornerstone support from existing and new shareholders to invest $16 million under the placement. Though, a portion of this will be subject to shareholder approval.

Management intends to use the capital raised to accelerate its pathway to profitability in the ANZ market. This is expected to be achieved by June 2023.

This will involve acquiring new merchants and customers at scale in the ANZ market, increasing customer retention, making platform and technology enhancements, and contributing to its growing receivables book.

Supporting the 'engine room of the company'

Openpay's ANZ CEO, Dion Appel, notes that this capital raising will support the company's key driver of growth.

Openpay ANZ is accelerating its pathway to profitability through sustainable growth, market-leading margins and business simplification. Australia is currently the engine room of the Company and we remain focused on delivering this plan. We appreciate the strong and continued support shown by existing shareholders, and new investors for the Placement and are pleased to welcome eligible shareholders to participate in the SPP on the same terms as the Placement to further accelerate our strategy.

Openpay will now seek to raise a further $2 million via a share purchase plan. This will be undertaken at 24 cents per share, which is the same price as the placement.

The post Why the Openpay share price is sinking 13% to a new low today appeared first on The Motley Fool Australia.

The nation's financial watchdog asked Openpay Group Ltd (ASX: OPY) and Laybuy Holdings Ltd (ASX: LBY) to change "potentially unfair and unclear" terms in their contracts on Monday.

Let's take a closer look at what might have weighed on some ASX BNPL shares this week.

Has this UK watchdog impacted ASX BNPL shares this week?

4 BNPL companies operating in the United Kingdom – 2 of which are listed on the ASX – were addressed by the nation's Financial Conduct Authority (FCA) over concerns regarding their terms and conditions.

Laybuy, Openpay, and Clearpay all voluntarily changed their contracts and refunded customers impacted by the 'unfair' terms this week.

Non-listed BNPL company Klarna was also caught up in the regulator's sweep. Though, as it doesn't charge late fees, it had no need to issue refunds.

FCA executive director of consumers and competition, Sheldon Mills said the body can't regulate BNPL firms yet, but it can hold them to other standards.  

"The 4 BNPL firms we have worked with have all voluntarily agreed to change their approach," Mills said. "We welcome this and hope that the rest of the industry will now follow."

One issue flagged by the watchdog was how the BNPL companies dealt with returned purchases.

It stated some customers had been forced to continue payments or charged late fees if a retailer took their time when reporting a return to a BNPL provider.

Additionally, the FCA found that the BNPL providers' terms and conditions allowed too much leeway when cancelling or suspending accounts and didn't let customers deduct money owed by the provider from their debts.

Finally, it was worried the contracts didn't clearly state how customers can cancel a provider's ability to take money from their debit or credit cards.

According to reporting by the Guardian, an Openpay spokesperson said the company welcomed the FCA's insights and would welcome "fair and appropriate regulation" in the United Kingdom.

The publication also stated Laybuy has flagged its preference for direct regulation from the FCA.

Alex Marsh, head of Klarna UK, commented on the regulator's action, saying the company welcomed the FCA's oversight and implemented the proposed changes to their terms and conditions in September 2021.

"We continuously review our Ts&Cs including working with Fairer Finance, to ensure that we are communicating in the most clear, fair, and transparent way," said Marsh.

"We have never received a customer complaint specifically related to these Ts&Cs but are always open to ways in which they can be improved."

What else might have weighed on the BNPL sector?

Other news that could have dragged on ASX BNPL shares this week include interest rate fears and the technology sector's performance.

As The Motley Fool Australia chief investment officer Scott Phillips told Nine's Late News on Sunday, markets have been concerned about rising inflation, which could drive up interest rates.

As previously reported by The Motley Fool Australia's Zach Bristow, rising interest rates are generally bad news for the tech sector, within which BNPL shares are often grouped.

Additionally, the tech-heavy Nasdaq Index has slumped 3% over the last 5 sessions.

The S&P/ASX 200 Info Tech Index (ASX: XIJ) has also slumped 1% this week while the S&P/ASX All Technology Index (ASX: XTX) has fallen 1.4%.

For comparison's sake, the S&P/ASX 200 Index (ASX: XJO) has gained 0.3% in the same time frame.

How have BNPL stocks performed this week?

While the news from the northern hemisphere may not have impacted the share price of both Openpay and Laybuy, they've both ended this week in the red.

The share price of Openpay has tumbled 4% since Monday, while that of Laybuy has plummeted 25%.

And while neither Zip Co Ltd (ASX: Z1P) nor Sezzle Inc (ASX: SZL) were involved in the FCA's findings, their share prices have fallen 8% and 11% respectively this week.

The Block Inc CDI (ASX: SQ2) share price has suffered the least. The owner of Afterpay has seen its ASX-listed stock slide just 1%.

Looking to the United States' markets, the Affirm Holdings Inc (NASDAQ: AFRM) share price has slipped 29% over the last 5 sessions.

Meanwhile, that of Paypal Holdings Inc (NASDAQ: PYPL) has tumbled 12%.

The post What's going so wrong for ASX BNPL shares this week? appeared first on The Motley Fool Australia.

• The buy now, pay later (BNPL) sector could be in for a tough time in 2022 according to one expert
• 2022 has already seen a big decline for many of the players, including the Zip share price which is down 30% this year
• Brad Kelly points out that almost none of the BNPL ASX shares are making a profit, which will make it harder to raise capital

The buy now, buy later (BNPL) ASX shares could be in for a "tough time" according to one of the experts of the payments industry.

There are plenty of BNPL businesses on the ASX like Zip Co Ltd (ASX: Z1P), Block Inc (ASX: SQ2), Sezzle Inc (ASX: SZL), Splitit Ltd (ASX: SPT), Laybuy Holdings Ltd (ASX: LBY), Openpay Group Ltd (ASX: OPY) and Ioupay Ltd (ASX: IOU).

Big declines

Investors have already seen major declines of the share prices of plenty of the buy now, pay later players.

In 2022, the Zip share price has fallen 30% so far. Over the past six months it has slumped 60%.

Since listing on the ASX a couple of weeks ago, the Block share price has fallen 17%. Block is the American company that recently acquired Afterpay.

In the calendar year to date, the Sezzle share price has fallen 27%. The past half-year has seen a 71% capitulation of Sezzle shares.

And so on. There has been a huge deterioration since the last reporting season.

'Tough time' coming

According to reporting by News.com.au, an expert of the payments sector called Brad Kelly has some negative expectations for the industry.

Mr Kelly, the managing director of Payment Services, said:

They are very good at marketing spin and PR, good at using the services of highly paid consultants to get around the Consumer Credit Act and are able to offer credit without it appearing as credit.

The reality is the BNPL provider's bad debts are astronomical, none of them have made a profit, none of them have paid a dividend and share prices are down 70% to 80% to even 90% in some cases.

Mr Kelly points out that nearly all of the companies in the buy now, pay later sector are reporting annual accounting losses.

Another, expert, Grant Halverson, the founder and chief executive of payments consultancy McLean Roche, thinks there is a danger that the buy now, pay later sector could see rising bad debts and the ASX shares could end up with a 'junk' rating regarding their debt.

Mr Halverson warned that the BNPL sector could suffer from rising interest rates, which would make it trickier to make a profit and raise money. Speaking to the Australian Financial Review, he said:

They're going to have to try to raise a lot of money.

It partly depends on how quickly interest rates go up, because if they go up quickly there could be carnage. If there's a slower uptick then obviously the carnage will be slower in my view.

What are some of the issues?

The experts point out that several large financial players have entered the BNPL space including Commonwealth Bank of Australia (ASX: CBA), Suncorp Group Ltd (ASX: SUN) and Citibank. PayPal is another player that now offers a buy, pay later option.

News.com.au reported that Mr Kelly believes that with no profit and none being sustainably profitable yet, it's likely that there will be consolidation in the sector.

There is also the longer-term risk of regulation and interest rate rises, which could impact growth too.

The post BNPL ASX shares in for a 'tough time': expert appeared first on The Motley Fool Australia.

• Buy now, pay later shares started February in the red
• Block's ASX listing crashed amid a sell-off in the United States
• Interest rate rises in 2022 were flagged by the RBA this week
• Block and Zip recovered some of their losses today

Buy now, pay later (BNPL) shares have had a shocking start to the month but some edged higher today.

Block Inc CDI (ASX: SQ2) share price has fallen nearly 15% since market open on 1 February. Zip Co Ltd (ASX: Z1P) has fallen nearly 13% in the same time period. However, in today's trade Block climbed 0.88% while Zip Co jumped 3%.

Let's take a look at what's been happening to BNPL shares lately.

BNPL woes

Block and Zip are not the only BNPL shares to fall in February. The Openpay Group Ltd (ASX: OPY) share price has descended 13% since market open on 1 February, while Beforepay Group Ltd (ASX: B4P) has slipped 9%.

Sezzle Inc (ASX: SZL) has also shed 13% in the same time period. In today's trade, Openpay held steady while Beforepay fell 4.64% and Sezzle finished 0.89% in the red.

Block's ASX listing dived after the company's US listing plummeted. Block Inc (NYSE: SQ) fell 20% between market close on 1 February in the US and 3 February.

Investors sold Block shares after rival Paypal's quarterly results fell short of market expectations. Paypal Holdings Inc (NASDAQ: PYPL) fell a mammoth 29% between market close on 1 February and 3 February in the US.

However, in after-hours trade, Block's US listing has gained more than 3% and Paypal has edged ahead 1.5%. This could be helping the company's ASX listing and confidence in the BNPL sector overall.

Zip's shares also fell heavily this week amid negative sentiment in the industry. My Foolish colleague Aaron noted any Reserve Bank of Australia rate hikes could impact consumer spending. And the Zip business model depends on this spending.

BNPL's shares suffered amid an overall tech stock slide this week. The S&P/ASX All Technology Index (ASX: XTX) dived almost 4% between market open on 1 February and close today. The index finished today 0.39% ahead.

BNPL share price recap

BNPL shares have suffered major losses in the past 52 weeks.

In the past year, the Zip Co share price has dived 63%. Meanwhile, Openpay has crashed 82% and Sezzle has plunged 74%. Meanwhile, Beforepay has shed 55% since joining the ASX this year, while Block has slipped 17%.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has returned more than 5% in the past year.

The post Some BNPL shares finished a horror week on a high. Why? appeared first on The Motley Fool Australia.

• Buy now, pay later shares took a beating on the ASX today
• The Zip share price fell 9.66%, while Block sunk 5.35%
• The All Technology Index also descended overall

Buy now, pay later (BNPL) shares had a shocking day on the market today but they are not alone.

Leading the pack is the Zip Co Ltd (ASX: Z1P) share price, diving 9.66%. For perspective, the S&P/ASX 200 Index (ASX: XJO) also fell 1.77% today, while the S&P/ASX All Technology Index (ASX: XTX) slumped 5.05%

Let's take a look at what happened to BNPL shares today.

Tech sector weakness hurts BNPL shares

The Block Inc CDI (ASX: SQ2) share price gravitated 5.35% while Openpay Group Ltd (ASX: OPY) shares cascaded 8.33%.

Meanwhile, Sezzle (ASX: SZL) shares tumbled 8.09% and Humm Group Ltd (ASX: HUM) shares plunged 2.48%.

Today's fall came amid an overall weakness in the technology sector in Australia.

Among the ASX tech share fallers was Xero Limited (ASX: XRO), down 6.69%.

Meanwhile, Wisetech Global Ltd (ASX: WTC) plunged 9.85% and NextDC Ltd (ASX: NXT) sunk 1.85%. Additionally, Megaport Ltd (ASX: MP1) dropped a mammoth 9.46%.

Block's ASX shares dropped slightly more than the company's US listing. The Block Inc (NYSE: SQ) share price fell 3.71% overnight in the United States.

Paypal Holdings (NASDAQ: PYPL) fell 0.77%. However, the Nasdaq-100 Index (NASDAQ: NDX) gained 0.17%.

The broader ASX index moved closer towards 'a correction' on Thursday, as my Foolish colleague Bernd noted.

Correction broadly refers to any pullback of more than 10% and the index is down more than 8% since the market close on 31 December.

The post What happened to ASX buy now, pay later shares today? appeared first on The Motley Fool Australia.

• The Openpay share price is almost 7% higher today
• The company's Q2 FY22 results showed record transaction value and soaring revenue
• In earlier trade, the company's share price jumped 9%

The Openpay Group Ltd (ASX: OPY) share price is in the green today amid a well-received quarterly update.

At the time of writing, the company's shares are trading at 64 cents, a 6.67% gain. In late morning trade, after the release of the results, the Openpay share price hit 65.5 cents, a 9% jump on yesterday's market close.

For perspective, the All Technology Index (ASX: XTX) is down 2.63%. Fellow buy now, pay later company Zip Co Ltd (ASX: Z1P)'s shares are also down 0.61%, while the Block Inc CDI (ASX: SQ2) share price is 4.43% lower.

Let's take a look at what the BNPL company revealed today.

Openpay share price surges amid quarterly results

Total Group Q2 FY22 results

• Record high total transaction value (TTV) of $118 million, 22% more than the previous corresponding period (PCP) of Q2 FY21.
• Total quarterly revenue of $8 million, soaring 30% on comparable basis to PCP
• Global net transaction margin improved 8% on PCP
• Net bad debts fell from 2.3% to 1.9%
• Active customers grew 33% on PCP to 614,000
• Active merchants exploded 60% on PCP to 4,400
• Active plans grew to 2.5 million, rising 71% on PCP

Australia and New Zealand

• $87 million TTV, up 41% on PCP
• Total quarterly revenue of $6.3 million, rising 37% on comparable basis to PCP
• Net transaction margin gained 2.4% on PCP
• Net bad debts dropped to 1.2%
• Active customers gained 23% on PCP to more than 300,000
• Active merchants grew 57% on PCP to 4,200
• Active plans gained 61% on PCP up to more than 1.5 million

What else happened in the quarter?

In Australia, Openpay said its targeted approach and improved productivity supported its ambition to make a profit in the next 12 to 18 months.

Openpay launched its US-branded OpyPay product in the United States in the second quarter of FY22. Since the launch, the company has signed dental, veterinary, and automotive merchants in eight US states.

Also in the quarter, the company launched a US$271 million debt facility from Goldman Sachs and Atalaya. Opy also partnered with American Express, Worldpay from FIS, and Experian.

In the UK, the company formed a strategic partnership and revenue sharing agreement with Payment Assist.

What did management say?

Commenting on the results, non-executive chairman Patrick Tuttle said:

In Q2 FY22, Openpay delivered record TTV and very strong operating and financial results in a competitive market whilst keeping costs down and implementing additional efficiency measures to continue this trend.

In ANZ, we delivered record operating performance as we manage the business to profitability, and in the US, Opy now has all the building blocks in place to monetise this significant opportunity.

What's next?

Openpay plans to prioritise growth in the US with its key partners in North America. The company says it has also secured a confidential agreement with a large US healthcare insurance provider to begin in the next quarter.

In the UK, the company has "made a strategic decision to change direction' and will update the market "as appropriate".

The company also plans to expedite its road to profit in Australia. As Motley Fool Australia reported earlier this month, Openpay has also announced some recent leadership changes.

Openpay share price snapshot

The Openpay share price has fallen 77% in the past 12 months, 15% in the past month alone. In the past week, it has shed almost 6%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) Index has returned nearly 2% in the last 12 months.

Openpay has a market capitalisation of $83 million based on its current share price.

The post Why is the Openpay (ASX: OPY) share price up 7% today? appeared first on The Motley Fool Australia.

Openpay shares are currently trading at 75 cents each, an 19.05% gain on yesterday's close.

Let's take a look at what else might be impacting the company's share price today.

What did Openpay announce?

Investors are likely responding to a big announcement from the buy now, pay later company. Firstly, Openpay will be making growth in the US market its major priority, working with its key partners in North America.

Openpay believes it can monetise what it describes as a "significant and unique opportunity". The company said it has support from major partners including American Express, Worldpay from FIS, Goldman Sachs, Cross River, Experian, PatientNow, ezyVet, and Kyriba.

The company has also onboarded dentists, vets, car dealers, and a US healthcare insurance provider to its platform across the country.

Significantly, Openpay also announced today its managing director and group CEO Michael Eidel will be leaving the company. The board has appointed Ed Bunting as interim group CEO, effective immediately.

As well, non-executive director Kelly Bayer Rosmarin, the chief executive officer at Optus, advised the company she will be leaving the board. Openpay will now look to fill her shoes with a US-based non-executive director.

Today's news comes on the same day as significant news from BNPL competitor Afterpay Ltd (ASX: APT). The Bank of Spain has approved it being taken over by Block. With Afterpay soon to leave the ASX, Openpay will have more market share in Australia. The Afterpay share price is up 4.76% at the time of writing.

Record transactions

As well as outlining its US goals, Openpay will also speed up its road to profitability in Australia on the back of record Q2 FY22 results.

The Openpay Australian business achieved its best-ever quarterly total transaction value (TTV) of $87 million. This included the highest ever TTV of $35 million in December, leading to $2.4 million in revenue. Year to date, the company achieved a TTV of $160 million, a 44% boost year on year.

The company plans to implement "efficiency measures" to help speed up profitability in the Australian market. An update on the Q2 financial results will be provided on 25 January.

UK update

Finally, Openpay confirmed it will no longer acquire Pay Assist in the United Kingdom. This potential acquisition target was touted to investors in June.

Instead, Openpay announced today it will enter a strategic partnership and revenue-sharing arrangement with the company in the UK market.

Management comment

Speaking on the Openpay change in direction, non-executive chairman Patrick Tuttle said:

This enhanced strategic focus in the US, in addition to bringing forward planned profitability in Australia and entering into a partnership agreement with Payment Assist in the UK market, will ensure the Group's capital and resources are best focused on those opportunities which the Board believes can deliver the strongest financial returns and long-term commercial success.

On behalf of the board, I want to thank Michael for his strong leadership and contributions to the company's achievements over the last three years, including highlights such as its listing on the ASX in 2019, successfully navigating the business through the various COVID pandemic lockdowns, driving substantial growth in all key business metrics, and establishing the solid platform to enable us to pursue a more streamlined regional strategy

Commenting on his exit, departing CEO Michael Eidel said:

It is the right time for the company to write the next chapter of its success story. The team can be proud of the great achievements over the last three years, and I wish them all the very best and great continued success.

Openpay share price recap

The Openpay share price has fallen nearly 67% in the past 12 months and 22% in the past month. However, it's managed to claw back just over 2% in the past week.

In comparison, the S&P/ASX 200 Index (ASX: XJO) has returned nearly 12% to investors in the past year.

The company commands a market capitalisation of roughly $97 million based on the current share price.

The post Why is Openpay (ASX:OPY) up 19% today? appeared first on The Motley Fool Australia.

In fact, these 5 ASX BNPL companies all saw their share price more than halve over the course of last year.

Let's take a look at which BNPL stocks suffered most in 2021.

A quick note before we start: This list only contains companies with market capitalisations of more than $30 million.

The worst performing ASX BNPL stocks of 2021

Laybuy Holdings Ltd (ASX: LBY) – down 82%

Unfortunately for Laybuy Holdings investors, the company has taken out the undesirable cake. It's crowned the worst performing ASX BNPL share for 2021.

The company's stock started the year trading at $1.31 and hit a 52-week high of $1.50. Over the course of the year, however, it tumbled to just 23.5 cents.

Splitit Ltd (ASX: SPT) – down 81%

2021 was also a particularly bad year for the Splitit share price.

It gradually dropped 81% of its value over the 12-month period.

At the start of the year, Splitit's shares were trading for $1.30. However, come the final close of the year it was going for 25 cents.

Openpay Group Ltd (ASX: OPY) – down 68%

Despite starting the year out strong, the Openpay share price ended last year 68% lower than it started it.

It tumbled from its starting price of $2.37 to end the year at 72.5 cents, hitting a 52-week high of $3.57 along the way.

Douugh Ltd (ASX:DOU) – down 59%

This ASX BNPL stock started the year out as the new face on the block.

Douugh floated in October 2020. It launched its first BNPL offering shortly after.

The company's stock started 2021 trading at 17 cents and quickly surged to its 52-week high of 37.5 cents. Though, its glory didn't last.

As of Friday's close, the Douugh share price is 6.9 cents.

Sezzle Inc (ASX: SZL) – down 51%

Popular ASX BNPL stock, Sezzle just snuck onto this list after falling 51% over 2021.

That's despite the company trading relatively flat for the first 8 months of the year – albeit, with plenty of peaks and troughs.

The company's half year report seemed to be the cataylst for its troubles. Its share price fell nearly 15% on the day of its release and hasn't managed to regain its feet since.

After beginning 2021 trading at $6.27, the Sezzle share price finished the year at $3.02.

The post These were the 5 worst performing ASX BNPL shares of 2021 appeared first on The Motley Fool Australia.

Two ASX shares have just hit 52-week lows today. Let's take a look at why they are down on their luck.

Booktopia Group Ltd (ASX: BKG)

The Booktopia share price plunged to a 52-week low of $1.31 today despite no news out of the company. The company's shares are trading at $1.33 at the time of writing, a 55.5% drop from their yearly high of $2.99 in August. They are now down almost 50% this year.

Investors have been selling Booktopia shares on the back of some tough news for the company. Earlier this month, the ACCC notified the company it would be taking it to the Federal Court. The claims relate to communications to customers with regards to returns and refunds.

Booktopia defended the claims in a statement to the market authorised by chairman Chris Beare on December 8. The company said:

At no time were these communications intended to exclude or limit Booktopia's obligations under the Australian Consumer Law.

Another factor impacting the Booktopia share price could be an update from the company just before Christmas.

In a trading update to the market on December 23, the company advised it is expecting earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $4 to $4.5 million in the first half of the financial year. This is up to 50% less than the $8 million recorded in the previous year.

The company advised earnings were lower due to labour costs managing Sydney's COVID-19 lockdowns. The ongoing threat of the COVID-19 Omicron variant in Australia could be continuing to impact investor confidence in this ASX share.

Openpay Group Ltd (ASX:OPY)

The Openpay share price hit a 52-week low on Thursday. In afternoon trade, the buy now, pay later (BNPL) company's shares are trading at 74 cents after hitting the yearly low of 73 cents this morning.

In fact, the Openpay share price is now down nearly 78% from its 52-week high of $3.35 and about 68% this year.

The latest decline in this ASX share reflects a trend across the BNPL sector.

The share price of Afterpay Ltd (ASX: APT) is tumbling 2.7% today, while Zip Co Ltd (ASX: Z1P) has slumped 2.51%. Sezzle Inc's (ASX: SZL) stock is also trading 2.27% lower.

Looking at the trend in the US, the Affirm Holdings Inc (NASDAQ: AFRM) share price fell 3.43%, while Paypal Holdings Inc (NASDAQ: PYPL) slipped 0.07%.  

The post 2 ASX shares hitting 52-week lows appeared first on The Motley Fool Australia.

The industry's pain comes amid the launch of an inquiry into BNPL companies by the United States' Consumer Financial Protection Bureau (CFPB).

At the time of writing, the Openpay share price is 84.5 cents, 6.11% lower than its previous close.

For context, the broader market is currently in the green. The S&P/ASX 200 Index (ASX: XJO) is up 0.56% while the All Ordinaries Index (ASX: XAO) has gained 0.47%.

Let's take a look at what's going on with ASX-listed BNPL providers on Friday.

Openpay share price tumbles alongside BNPL peers'

The Openpay share price is suffering today, but at least it's not alone.

Right now, the share price of the sector's biggest participant, Afterpay Ltd (ASX: APT) is experiencing a 7% fall, while that of Zip Co Ltd (ASX: Z1P) has tumbled 5%. Sezzle Inc's (ASX: SZL) stock is also trading 6% lower.

Interestingly, the Humm Group Ltd (ASX: HUM) share price is bucking the trend, recording a 1.4% gain.

Looking internationally, the Affirm Holdings Inc (NASDAQ: AFRM) share price fell 10.5% overnight, while that of Paypal Holdings Inc (NASDAQ: PYPL) slipped 1%.  

CFPB launches inquiry into BNPL services

United States' financial law implementation and enforcement body, CFPB, is concerned about the burgeoning BNPL industry's effects on the health of the financial sector and consumers' finances.

In reaction to its worries, it has launched an inquiry into the industry. The inquiry will focus on debt levels, regulatory conformity, and data collections.

It's put the call out to 5 industry giants, Afterpay, Zip, Paypal, Affirm, and Klarna, to provide information on the pros and cons of their services.

According to CFPB director Rohit Chopra, the body will use the information collected from the companies to "report to the public about industry practices and risks".

The entity is working with its international partners to conduct the inquiry. It specifies such partners exist in Australia.

Right now, the Openpay share price is 64% lower than it was at the start of 2021. It has also slipped 27% since this time last month.

The post Openpay (ASX:OPY) share price sinks 6% in grim day for ASX BNPL shares appeared first on The Motley Fool Australia.