During the lunch hour on Friday, the All Ordinaries Index (ASX: XAO) has recovered its morning losses and is trading just about where it ended yesterday.

And this ASX buy now, pay later (BNPL) stock is doing more than its fair share of the heavy lifting, rocketing 13% after announcing a collaboration with Visa Inc (NYSE: V).

Any guesses?

If you said Splitit Payments Ltd (ASX: SPT) go to the front of the class.

Splitit shares closed yesterday trading for 11.5 cents per share. Shares are currently swapping hands for 13 cents apiece, putting the stock up 13% at the time of writing.

Here's what the ASX BNPL share reported this morning.

Splitit share price soars on Visa collaboration

Unlike many pay by instalment providers, Splitit allows its customers to make payments over time with their eligible credit cards.

Today, investors are bidding up the ASX BNPL share after the company reported it had signed a new two-year partnership agreement with Visa.

The agreement will see the two firms trial an enhanced instalment solution they've been collaborating on. This is intended to optimise consumer experience for Visa Instalments embedded in the Splitit solution.

According to the release, Visa Instalments will be integrated within Splitit's existing API to provide a "fully embedded and universal consumer experience". The companies expect to launch the pilot program in the second half of 2023.

Splitit CEO, Nandan Sheth said the new instalment solution will enable "acquirers and merchants to access the powerful benefits of Visa Instalments coupled with Splitit's universal credit card acceptance in a single API integration and solution".

Sheth added:

By providing consumers with an optimised, simplified instalment experience, merchants can enjoy improved sales conversion and increased order size. We look forward to working closely with the team at Visa to launch the solution.

The ASX BNPL share noted that future revenue from the agreement with Visa is unknown "due to the variable nature of revenues which are dependent on the value of customer purchases using Splitit's services".

Splitit did say that it expects the partnership "may have a material impact" on its brand and business development prospects.

How has this ASX BNPL share been performing?

Despite today's big lift, the Splitit share price remains down 50% over the past 12 months.

The ASX BNPL share has dropped 24% so far in 2023.

The post Guess which ASX BNPL share just rocketed 13% amid a deal with Visa appeared first on The Motley Fool Australia.

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.

At the time of writing, the ASX All Ords share is trading for 63 cents. This is just a tad beneath its intraday high of 66 cents, which reflects a 22.22% bump on yesterday's closing price of 54 cents.

Sezzle's good news is also pushing up other ASX BNPL shares today. At their intraday peaks, the Zip Co Ltd (ASX: ZIP) share price was 21.4% higher and the Splitit Ltd (ASX: SPT) share price lifted by 14.3%.

By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is down 0.35% at the time of writing.

What news is rocketing this ASX All Ords share higher?

Sezzle's October business update released today revealed an 18% boost to income year over year.

In its statement, the company said "significant progress continues to be made towards profitability".

Sezzle reaffirmed that it was on track to successfully deliver US$60 million in annualised revenue and cost savings over 1Q FY23.

The company raked in US$11.5 million in October, up 8.7% on the month prior. That's a new high as a percentage of underlying merchant sales (UMS).

UMS is used as a measure of Sezzle's revenue because charging merchant fees is one way it makes money. UMS came in at 7.8% in October — a 190 basis points lift year over year.

The net loss for October was US$1.5 million, compared to an average monthly net loss of US$8.6 million over the fourth quarter of FY21.

The adjusted EBTDA for October was negative US$200,000, compared to an average monthly adjusted EBTDA of negative US$8.2 million in Q4 FY21.

What did management say?

Charlie Youakim, Sezzle chair and CEO, said:

Our path to profitability is not just about cost cutting, but also growing revenue. October was the Company's second-best performance ever, in terms of revenue.

We are looking forward to the upcoming holiday season and expect to reach new highs in top line performance.

We are even more excited about 2023, as we expect to turn the corner in profitability and launch additional revenue generating and cost savings initiatives beyond the US$60.0M announced in 2022.

Sezzle is targeting profitability in 2023. Chief competitor Zip has similar goals, aiming to be cash flow positive by the first half of FY24.

Sezzle and Zip mutually agreed to call off their proposed merger earlier this year.

Pending headwind for BNPL shares?

Some BNPL shares did not receive as much of a kick today. At the time of writing, Humm Group Ltd (ASX: HUM) shares are up 1.82% and Block Inc CDI (ASX: SQ2) shares are up 0.61%.

As we reported earlier, the BNPL sector is awaiting the release of a federal government options paper, which will propose three new models for tighter regulation of the fast-growing industry.

New regulations may present challenges for ASX All Ords shares in the BNPL space. This is because investors generally assume that greater regulation on any business will have a negative impact.

The post Guess which ASX All Ords share is leaping 22% on 'significant progress towards profitability' appeared first on The Motley Fool Australia.

Splitit shares are trading for 17.8 cents at the time of writing. Shortly after open on Wednesday, however, shares in the buy now, pay later provider fell 8% from the previous closing price of 18 cents.

Let's go over the report highlights.

What did Splitit report?

• Merchant sales volume $US194.8 million (AU$283.40 million), up 12.92% year over year (yoy)
• Net transaction margin up 1.3% from 0.3% in FY21
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) up 34.99% yoy to a loss of US$8.79 million (AU$12.79 million)
• Net loss after tax down 35% yoy to US$12.25 million (AU$17.82 million)

Some of the year's highlights included a new growth strategy for the company's instalments-as-a-service tech, with a greater emphasis on sourcing new partners.

Its partnership program reportedly built strong momentum in 2HFY22, with an enhanced partnership with BlueSnap and forming a new partnership with Everyware.

Nandan Sheth joined the company as the new Splitit CEO and managing director. While Dan Charron joined as a non-executive director.

What else happened in FY22?

The company also announced a placement of 64.4 million new shares at $0.175 per share, for a total of around AU$10.5 million. Splitit directors and c-level managers have agreed to subscribe a further AU$775,000.

The placement also allows investors to purchase stock options, with one free-attaching option offered for every two new shares purchased. Around 32.2 million options will be offered with an exercise price of AU 20 cents each and an expiry date of 30 months from the date of issue.

Funds will be used to drive the company's growth, expand its white-label instalments-as-a-service solution, and develop its buy now, pay later credit facility for merchants.

What did management say?

Splitit CEO and managing director Nandan Sheth said:

Splitit's rejuvenated growth strategy positions it to power the next generation of BNPL infrastructure for the existing payments ecosystem. Under this strategy, Splitit has already made good progress accelerating its pathway to profitability in the half year, including net transaction margin growth to 1.25% and a 22% reduction YoY in operating expenditure.

What's next?

The company said it is eyeing transaction margin and cost efficiencies to help it reach profitability. This will be helped by revising its $150 million receivables contract with Goldman Sachs, which is expected to save the company an additional US$5.3 million (AU$7.71 million) over two years.

Splitit will continue onboarding major global merchants and work with additional major payment providers.

The end goal of this strategy is to expand its white-label instalments-as-a-service offering across a broad and growing merchant base.

Splitit share price snapshot

The Splitit Payments share price is down 29% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 7.8% over the same period.

The company's market capitalisation is approximately $83.68 million.

The post Splitit share price down amid $17 million loss appeared first on The Motley Fool Australia.

This comes as the ASX buy now, pay later BNPL company requested that its shares be placed in a trading halt.

The payment solution provider's shares are now frozen at yesterday's closing price of 20.5 cents apiece.

Why is the Splitit share price halted?

Before market open today, the company requested the Splitit share price to be halted while it prepares to make an announcement.

According to its release, Splitit plans to update the market regarding a proposed capital raising by a way of a placement.

Splitit has asked that the trading halt remain in place until Tuesday 30 August or following the release of its announcement, whichever comes first.

What does this mean?

While details remain unknown about the capital raise, it appears the company may be seeking to fund its growth strategy.

In its Q2 FY22 quarterly report, Splitit CEO Nandan Sheth said:

Our differentiated business model that unlocks existing credit for merchant funded instalments is becoming the most viable alternative to the high friction and high-risk legacy BNPL services. The industry is starting to recognize that Splitit's unique model stands apart in a crowded space of players extending unsecured loans to subprime consumers.

Our new strategy will continue to mature over the next 12 months. As we re-balance our existing merchant portfolio, focusing more on acquiring large profitable merchants, the benefits of this pivot will continue to be realised through 2022, and beyond.

About the Splitit share price

A rollercoaster of the past 12 months has seen the Splitit share price tank almost 60% for the period.

Ultimately, this has led the company's shares to register a loss of 18% year-to-date.

Splitit has a market capitalisation of $96.64 million with around 471 million shares outstanding.

The post Why is the Splitit share price frozen on Friday? appeared first on The Motley Fool Australia.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) is leading the S&P/ASX 200 Index (ASX: XJO) with a 1.87% gain while the S&P/ASX All Technology Index(ASX: XTX) is lifting 1.52%.

For context, the ASX 200 is currently down 0.34% and the All Ordinaries Index (ASX: XAO) has dumped 0.23%.

And these ASX tech shares are reaping the rewards of their sector's gains.

They're each surging more than 10% on Wednesday. Let's take a look at why.

3 ASX tech shares gaining more than 10% today

Splitit Ltd (ASX: SPT)

ASX buy now, pay later (BNPL) provider Splitit is gaining today. Its share price is lifting 11.5% at the time of writing to trade at 26.2 cents.

There's been no news from the company to explain its rise. However, many of its BNPL peers are also well and truly in the green.

The Zip Co Ltd (ASX: ZIP) share price is currently up 9% while that of Sezzle Inc (ASX: SZL) is gaining 5%.

Webcentral Ltd (ASX: WCG)

Meanwhile, ASX digital services provider Webcentral is also getting in on tech's day in the green, surging 13% to trade at 26 cents today.

The company announced an on-market share buyback on Wednesday. It said the buyback highlights its strong balance sheet, cash flow generation, and disciplined capital management.

Dotz Nano Ltd (ASX: DTZ)

The final ASX tech share to be posting a notable gain today is Dotz Nano. The stock has leapt 11% to reach 30 cents right now.

There's been no news from the anticounterfeiting and tracing solutions-focused tech company to explain today's gains.

However, it tumbled 10% over the course of Monday and Tuesday. Thus, its Wednesday gains might be representing a rebound of sorts.

The post 3 ASX tech shares surging more than 10% today appeared first on The Motley Fool Australia.

Other ASX BNPL shares are also well into the green today, including Splitit Ltd (ASX: SPT) up 12.77%.

There's been new momentum in the BNPL space in recent weeks. The Sezzle share price is up — wait for it — 256% over the past month. The Zip share price has gained 175% over the same timeframe. Splitit shares are up 92%, Block Inc CDI (ASX: SQ2) is up 31.64%, and Humm Group Ltd (ASX: HUM) is up 15%.

What's the sizzle on the Sezzle share price?

There is some price-sensitive news out of Sezzle today with a revolving credit facility amendment.

However, the lift in the Sezzle share price likely has nothing to do with this announcement. It simply appears to be a case of the BNPL sector coming back.

To recap, FY22 was the year from hell for BNPL shareholders. As my Fool colleague Brooke reports, some BNPL shares tumbled more than 90%.

Among the elements messing things up for BNPL shareholders were new competition, and concerns that rising inflation and interest rates could curb people's spending and, thus, their use of BNPL services.

The Commonwealth Bank of Australia (ASX: CBA) launched its StepPay offering and National Australia Bank Ltd (ASX: NAB) launched NAB Now Pay Later. News that Apple Inc may soon launch its Apple Pay Later offering in addition to PayPal Holdings Inc scrapping its late fees also hurt ASX BNPL share prices.

Zip also canned its proposed takeover of Sezzle in early July "in light of current macroeconomic and market conditions".

Are BNPL shares back in vogue?

So what's changed? It's still unclear. Just last week, the Sezzle share price exploded before the ASX called time out to ask the company if it knew why.

In its response, Sezzle said it believes "investors led the increase in trading activity, because of the sector having been significantly down in recent weeks".

So, maybe it's just a simple case of investors deciding BNPL shares are too cheap to ignore now.

Plus, there's been some good news from the main BNPL players recently.

Sezzle shares soared last Friday after the company released its FY22 Q2 update. Sezzle told the market it expects to become profitable in the next six months, which is a huge deal.

Previously, Zip also released a pleasing quarterly update.

The post Why is the Sezzle share price surging 8% on Wednesday? appeared first on The Motley Fool Australia.

BNPL shares are having an absolutely jubilant day. Take the Zip Co Ltd (ASX: ZIP) share price. As we looked at earlier, Zip shares are having a cracker. The ASX's biggest BNPL share has rocketed by 20.47% so far today to back over $1 a share.

That comes after the company rose as high as $1.07 at one point this morning (up 24%). It's the first time in two months that Zip shares are asking dollars, not cents.

But it's not just Zip shares at the party. Zip's BNPL rival that was left at the altar last month – Sezzle Inc (ASX: SZL) – is up more than 20% so far today at 31 cents a share. Again, Sezzle went as high as 34 cents this morning, a gain of more than 30%.

Or take Splitit Ltd (ASX: SPT). Splitit shares have risen a healthy 14.3% so far today to 24 cents each.

Interestingly, Block Inc (ASX: SQ2), the now-owner of the old BNPL pioneer Afterpay, is not crashing the BNPL party. In stark contrast to these other BNPL shares, Block shares have been smashed today, currently down close to 4%. But Block is not a pureplay BNPL share and is headquartered over in the US. So that might explain this disparity.

So what's lighting a rocket under the BNPL space today?

Why are ASX BNPL shares like Zip having such a cracker today?

Well, unfortunately, it's not quite clear. Zip, nor any of the other ASX BNPL shares, has released any news or announcements today. Or indeed this week so far. So we can only speculate.

Today is not the first day we have seen renewed interest in BNPL shares. Zip has been on the up for a few weeks now. In fact, the company has put on an impressive 130% or so since only 30 June.

We have seen a number of well-received developments out of Zip in particular over the past few weeks. These could be spurring investors into BNPL shares today.

The first was the news that the planned merger between Zip and Sezzle had been scrapped. At the time, this news sent Zip shares higher, and Sezzle shares lower. But all appears forgiven on the Sezzle side of the ledger today.

Perhaps more significantly, Zip gave investors a well-received quarterly update just last week. This showed that the company's revenues over the three months to 30 June grew by a healthy 27% to $160.1 million. The company also reported that transactions and customers were also up significantly over the period.

Thus, it's very possible that the goodwill from this announcement is still flowing into the entire ASX BNPL space today.

Whatever the reason, it's certainly a pleasing day for almost all ASX buy now, pay later share investors this Tuesday.

The post Why are ASX buy now, pay later shares rocketing higher today? appeared first on The Motley Fool Australia.

Here's how the market's favourite BNPL stocks performed last financial year:

• Zip Co Ltd (ASX: ZIP) – fell 94% to 44 cents
• Block Inc (ASX: SQ2) – fell 48.76% to $90.50
• Humm Group Ltd (ASX: HUM) – fell 58.5% to 41 cents
• Sezzle Inc (ASX: SZL) – fell 97% to 26 cents
• Splitit Ltd (ASX: SPT) – fell 75% to 13 cents

For context, the S&P/ASX 200 Index (ASX: XJO) slipped around 10% in that period.

So, what exactly sent ASX BNPL shares tumbling in FY22? Let's take a look.

What went wrong for ASX BNPL shares in FY22?

Afterpay waves goodbye

Former ASX market darling and BNPL giant Afterpay was wiped from the books in FY22 after it was snapped up by Block. The deal – once worth $39 billion – saw Afterpay shareholders offered 0.375 Block shares for each stock owned.

Afterpay left the ASX in early February after Block's CHESS Depository Interests (CDIs) hit the market in January.

What else went on with BNPL shares?

There was plenty more major news impacting ASX BNPL players in FY22.

Zip posed a takeover offer for fellow BNPL stock, Sezzle in February. Under the deal, shareholders would receive 0.98 Zip stocks for each Sezzle share owned.

And, of course, an abundance of new competition broke out onto the scene.

Commonwealth Bank of Australia (ASX: CBA) launched its StepPay offering early in the peace. National Australia Bank Ltd (ASX: NAB) revealed a similar product in May.

But it wasn't just ASX 200 banking giants encroaching on the space. Word that tech giant Apple may soon launch its Apple Pay Later offering hit headlines in June while PayPal scrapped late fees from its BNPL service last year.

ASX turns on BNPL shares

Though, the major driver for ASX BNPL shares' downturn appears to be a huge shift in investor sentiment.

FY22 saw Australia's inflation spike to 5.1%, after which the Reserve Bank of Australia implemented a series of rate hikes.

That went hand in hand with a turnaround in the tech sector. Many tech stocks derive their valuations from assumed future profitability. Thus, they can represent greater risks in inflationary environments.

At least ASX BNPL shares weren't alone in the red. The S&P/ASX 200 Information Technology Index (ASX: XIJ) and the S&P/ASX All Technology Index (ASX: XTX) have fallen more than 30% over the last 12 months.

The post Why did some ASX BNPL shares plummet more than 90% in FY22? appeared first on The Motley Fool Australia.

Interestingly, most ASX-listed companies in the field were silent during this time. Here's how the ASX's most renowned BNPL shares performed last month:

• Zip Co Ltd (ASX: ZIP) – fell 52%
• Humm Group Ltd (ASX: HUM) – fell 47%
• Sezzle Inc (ASX: SZL) – fell 53.5%
• Block Inc (ASX: SQ2) – fell 28%
• Splitit Ltd (ASX: SPT) – fell 58%

For context, the S&P/ASX 200 Index (ASX: XJO) slipped nearly 9% last month while the All Ordinaries Index (ASX: XAO) slumped 9.5%.

So, what inspired such a dismal period for ASX BNPL shares? Let's take a look.

What dragged ASX BNPL shares down in June?

Inflation, rates, and potential regulation, oh my. ASX BNPL shares suffered through yet another month of uncertainty in June.

The Reserve Bank of Australia hiked interest rates by 0.5% early last month in an attempt to control surging inflation. And that was likely bad news for ASX BNPL shares.

Increasing rates make debt more expensive and, as a result, generally slows the economy, my Fool colleague Brendon Lau reports.

Pricier debt is often a hit to companies' bottom lines. But BNPL companies face even greater challenges in such an environment.

A slower economy increases the likelihood that BNPL users default on payments, creating more bad debts.

Additionally, consumer sentiment tends to waver when rates rise. That could see fewer customers forking out on purchases they would otherwise use BNPL services to cover.

And finally, the regulation of BNPL companies has been flagged once more. Federal Financial Services Minister Stephen Jones is reportedly expected to introduce legislation to do just that in the near future.

There was also some notable drama among ASX BNPL shares last month.

Drama in Humm's camp

While most ASX BNPL shares stayed silent through June, the Humm board was reshaped into a battleground.

Five of the company's six board members announced their resignation last week after its remaining director campaigned against the now-scrapped sale of its BNPL leg.

Humm founding director and major shareholder Andrew Abercrombie fought against the company's plan to sell its consumer finance business to Latitude Group Holdings Ltd (ASX: LFS) in a previously proposed mostly-scrip deal.

The company previously noted the business had failed to turn a profit in 2022.

The post June was a terrible month for ASX BNPL shares. Here's why 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.

The S&P/ASX All Technology Index (ASX: XTX) shed almost 6% shortly after the open following a poor lead from its US counterparts. This makes the tech sector the worst performer so far today.

Inflation fears pressuring the Zip share price

The higher-than-expected inflation reading from the world's largest economy is stoking the fires of fear. Overnight it was revealed that US inflation is currently at 8.3%, which remains close to the 40-year high of 8.5% recorded in March. Investors are worried that the US Federal Reserve will have to aggressively raise interest rates to cool rising prices.

Higher rates are bad news for risk assets, particularly growth shares which typically trade at a premium with little to no profits.

Given how globalised markets are, rising US rates could also put more pressure on the Reserve Bank of Australia to lift rates here.

More bad news

Little wonder the Zip share price has lost a further 5% to hit 95.5 cents at the time of writing. It was only two days ago that the buy now, pay later (BNPL) share crashed under $1 due to much to the same headwinds.

But there could be more bad news for long-suffering Zip shareholders. Charities and consumer groups are calling for tighter regulation on the BNPL sector – no matter who wins government this month.

The surging cost of living is pushing more vulnerable consumers to use BNPL services to pay for daily essentials, according to these groups.

How the Zip share price is performing

Zip isn't the only ASX tech share feeling the pain from the wider tech sell-off this morning. Shortly after open, the Block Inc (ASX: SQ2) share price crashed 15.8% to a new 52-week low of $102. The Splitit Ltd (ASX: SPT) share price lost 7.1% to 26 cents and Humm Group Ltd (ASX: HUM) shed 2.7% to 72 cents.

However, over the past year, the Zip share price has been the laggard within the group. Zip shares have collapsed 85%. The Block share price is down 41% and the Splitit share price has lost 60%. The Humm share price is faring better with a more modest 17% decline.

The post Zip share price tumbles 5% to another multi-year low appeared first on The Motley Fool Australia.

For comparison, the S&P/ASX All Technology Index (ASX: XTX) is currently climbing 2.08%.

Let's take a look at what is impacting the Splitit share price today.

Splitit responds to ASX query

Splitit shares have had a stellar month, surging around 60% since market close on 5 April.

During this time, the ASX has sent Splitit two share price queries, one of which was released to the market today.

Splitit shares soared 31% between market close on 5 April and 27 April. Then on 28 April, the company's share price exploded 55%.

The ASX BNPL share reiterated today is not aware of any non-public information that explained the first price and volume movement.

With regard to the second movement, Splitit cited the CEO's new vision potentially impacting the share price.

Commenting on the second share price movement, Splitit said:

Splitit believes that, after almost 6 months without a permanent CEO in place, gaining insight into the new CEO's assessment of Splitit's potential may have influenced investors to trade in Splitit's shares.

Splitit told the ASX it is complying with listing rules. The company also responded to the ASX on 27 April advising it was not aware of any information explaining recent trading of its shares.

On 28 April, the company released a quarterly activities report, CEO presentation, and AGM meeting results.

In a new vision outlined on 28 April, CEO Nandan Sheth highlighted Splitit "bridges the gap" between BNPL and credit cards. The company also revealed it is in talks with Google about expanding its partnership with the technology giant to United States customers.

The company allows customers to split payments using available credit lines. This differentiates the company from other ASX BNPL shares.

Sheth commenced in the role of CEO on 28 February.

Share price snapshot

The Splitit share price has fallen 66% in the past year. However, this year to date it is up 2%, while it is up 21% in the past week alone.

Splitit has a market capitalisation of about $129 million based on the current share price.

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The Splitit Ltd (ASX: SPT) share price surged to 33 cents before midday today. This is 113% higher than the 15.5 cent closing price one month ago on 4 April. The company's share price has since retreated to 28.5 cents at close of trade on Wednesday.

So why is the Splitit share price surging?

What's going on with this ASX BNPL share?

The Splitit share price exploded 55% on 28 April alone. Driving this share increase was the CEO outlining a new vision for the company.

Splitit is a BNPL that allows customers to split payments using their available credit. This makes the company's business model different to other BNPL shares.

In a CEO presentation, Splitit revealed it is looking to expand its Google partnership to United States customers.

The company also reported quarterly results. Revenue increased by 6% on the prior corresponding period, while sales volume jumped 23% year on year.

Finally, the company also approved a US$150 million Goldman Sachs credit facility at the annual general meeting on 28 April.

CEO Nandan Sheth commented on the company's direction:

Splitit is uniquely positioned as it bridges the gap between BNPL and credit cards by making instalment payments possible on any credit card purchase at the point of sale.

The Splitit share price also surged 50% between market close on 19 April and 27 April. On 27 April, Splitit responded to a share price query from the ASX. Splitit said it was not aware of any information explaining recent trading of the company's shares.

Splitit has outperformed other BNPL shares in the past month. The Zip share price has slipped 33% since market close on 4 April, while Block Inc (ASX: SQ2) has descended 20%.

Share price snapshot

The Splitit share price has fallen 62% in the past year. It has recouped some of those losses, jumping 12% year to date.

In the past week alone, it has surged 47%.

Splitit has a market capitalisation of about $131.7 million based on the current share price.

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The buy now, pay later (BNPL) company that allows consumers to split payments using their existing credit line also held its annual general meeting (AGM) today.

At the time of writing, the Splitit share price is 24 cents, 14.29% higher than its previous close.

Let's take a closer look at what's going on with the BNPL provider's stock on Thursday.

Splitit share price surging as revenue jumps 6%

• US$2.6 million in revenue – up 6% on that of the prior comparable period
• Merchant sales volume of US$101 million – a 23% year-on-year increase
• A 43% increase in 12-month active merchants, reaching 1,300
• A 20% increase in 12-month active shoppers, coming to 327,000

Splitit recorded a strong performance for the 3 months ended 31 March, which followed an outstanding December quarter.

The final quarter of 2021 housed major shopping events like Black Friday, Cyber Monday, and the Christmas trading period.

Thus, when compared to the December quarter, Splitit's revenue for the March quarter fell 24% and its merchant sales volume dropped 22%.

Meanwhile, the number of active shoppers using the service fell 1% quarter-on-quarter due to the last remaining debit shoppers being removed from the 12-month lookback period.

Year-on-year, its merchant sales volumes increased more than its revenue due to more contributions from shorter dated loans. Its net transaction margins also increased 1.6% year-on-year.

Splitit recorded a cash decrease of $4.2 million last quarter – a 73% improvement on the prior quarter's. When one-off costs are removed, the company's net overall cash decrease for the quarter was US$2.2 million – an 86% improvement.

As of the end of the quarter, Splitit had US$25 million of cash, US$78 million of funded merchant receivables, and US$67 million of debt. That left it with a net cash position of US$36 million.

The company's shareholders also approved a US$150 million Goldman Sachs credit facility at today's AGM.

What else happened last quarter?

Last quarter, Splitit's customers used its service for larger purchases such as furniture, sporting equipment, and luxury items.

The company also underwent a cost rationalisation exercise that will see its costs falling from this quarter.

Finally, Splitit appointed its new CEO, Nandan Sheth, in January.

What did management say?

Sheth commented on the news helping to drive the Splitit share price higher today, saying:

[M]y initial weeks as CEO … has reinforced my conviction about why I joined Splitit, and I have also had the opportunity to formulate a new vision for the company in what is a rapidly evolving sector.

Splitit will drive the next generation of BNPL for merchants, issuers, and networks by focusing on becoming the infrastructure layer of BNPL … [it's] uniquely positioned as it bridges the gap between BNPL and credit cards …

The ability to access customers' available credit also means we operate an entirely different business model to providers of new debt that are under growing regulatory scrutiny, providing us with a path to scalable, profitable growth.

What's next?

Splitit's future is bright, according to the company's new CEO.

"BNPL has rapidly grown to account for 2% of global eCommerce in 2020 and by 2030 is estimated to reach US$3.3 billion, indicating its permanent role in the everyday lives of customers around the world," said Sheth.

"In an inflationary environment, affordability tools such as instalment solutions are becoming increasingly important, even for wealthier customers."

In the near term, Splitit will look to grow its existing partnerships to target verticals with high merchant sales volume opportunities and good product-market fits.

It will also aim to offer white-label 'instalments as a service' solutions, focusing on the US market.

Finally, the company is planning to enable card issuers to participate and monetise BNPL at the point of sale and within the shopper's purchase journey.

Splitit is also in talks with Google USA to expand its current partnership in Japan to the tech giant's US-based customers.

Splitit share price snapshot

Today's gains haven't been enough to boost the Splitit share price into the green.

The BNPL company's stock is currently 14% lower than it was at the start of 2022. It has also fallen 67% since this time last year.

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But for most of Wednesday the buy now, pay later (BNPL) player has soared around 30% higher, peaking mid-morning at 26 cents – a pop of 36.84%.

However, this comes on a day the ASX is seeing a lot of declines, particularly with the ASX tech share space.

For example, at the time of writing, the Zip Co Ltd (ASX: ZIP) share price is down over 4.6%, the Block Inc (ASX: SQ2) share price is down 6%, and the Sezzle Inc (ASX: SZL) share price is down 7.22%.

So, why is the BNPL ASX share up so much?

What's impacting the Splitit share price?

The ASX has queried the BNPL company about why the Splitit share price has jumped so much.

Splitit said it was "not aware of any information" that hadn't been announced that would explain today's trading. It said that it had announced all material price-sensitive information.

Annual general meeting

Splitit is scheduled to hold its AGM on Thursday 28 April.

The company hasn't given any indication about any updates that it may reveal. However, it will have an opportunity to tell investors how it performed in the three months to March 2022. It may also be able to tell investors about any new merchants that it has won as well.

It will be interesting to see if the BNPL business does reveal anything tomorrow that may be deemed as price sensitive, or influential on the Splitit share price.

The post The Splitit share price just popped 30%. What's with this ASX BNPL share? appeared first on The Motley Fool Australia.

While the broader market ended the month in the green – the All Ordinaries Index (ASX: XAO) and S&P/ASX 200 Index(ASX: XJO) each gained 6.3% in March – nearly all ASX-listed BNPL stocks slipped lower.

In fact, the market's favourite pureplay BNPL stock, Zip Co Ltd (ASX: Z1P), recorded the biggest tumble of the month.

So, what dragged on some of the sector's biggest players in March? Let's take a look.

What drove ASX BNPL shares lower in March?

While ASX BNPL shares might have been hit with talk of inflation and interest rate rises, there were plenty of concrete happenings that weighed many down last month.

Firstly, shares in Zip and Sezzle Inc (ASX: SZL) both entered March fresh from the freezer after the former made a takeover bid for the latter.

The all-scrip deal – quickly accepted by Sezzle's board – will see investors receiving 0.98 shares in Zip for each Sezzle stock they own.

The Zip share price tumbled 6% on 1 March, while that of Sezzle gained almost 10%.

Zip also underwent a $148.7 million institutional placement to strengthen its balance sheet last month. Finally, it opened a share purchase plan that could raise $50 million.

Additionally, Sezzle made more headlines in March when it announced it would dump 20% of its workforce to save around US$10 million annually.

Over the course of last month, the Zip share price tumbled 32.5% while that of Sezzle fell 24.1%.

Block Inc (ASX: SQ2) was one of the only ASX BNPL shares to record a gain last month. It is, of course, the owner of former market favourite, Afterpay.

The Block share price gained 19.3% in March despite no news being released by the company. However, it was removed from the S&P/ASX 20 Index (ASX: XTL).

Speaking of index movements, shares in Latitude Group Holdings Ltd (ASX: LFS) entered the All Ords last month. Meanwhile, those of Splitit Ltd (ASX: SPT) were booted from the benchmark index.

Novatti Group Ltd (ASX: NOV)'s stock also went through an index shakeup – it was dumped from the S&P/ASX All Technology Index (ASX: XTX).

The share prices of Latitude, Novatti, and Splitit fell 5.7%, 4.1%, and 11.1% respectively last month.

Finally, ASX BNPL shares Humm Group Ltd (ASX: HUM) and IOUPay ltd (ASX: IOU) also slipped lower last month. They fell 2.2% and 5.5% respectively.

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• 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.

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• Splitit shares slide regardless of company appointing experienced industry exec
• Incoming CEO, Nandan Sheth to serve as CEO from 28 February
• Current interim CEO, John Harper will oversee transition

The Splitit Ltd (ASX: SPT) share price is falling wayside along with the broader All Ordinaries (ASX: XAO).

The buy now, pay later (BNPL) company announced a leadership change after securing a seasoned payments industry executive.

At the time of writing, the Splitit share price is down 2.17% to 22.5 cents a pop. While marginally lower, this means that its shares have lost almost 12% in a week.

Splitit appoints new CEO

Investors are selling off the Splitit share price despite the company finding its successor for the top job.

In a statement to the ASX, Splitit advised it has appointed Nandan Sheth as its CEO, effective 28 February.

Mr Sheth brings a wealth of experience to the role, having served at a range of financial and technology organisations. This includes large payment companies, major banks, Fortune 100 companies and disruptive technology start-ups across North America and Europe.

Prior to joining Splitit, Mr Sheth held the position of Head of Global Digital Commerce and Head of Carat business at Fiserv.

His earlier experience includes serving as general manager at American Express and co-founding and scaling Harbor Payments and e-Debt.

Mr Sheth holds an MBA from the Cass Business School and a Bachelor of Science with Honours from City, University of London.

Interim CEO, John Harper who took the helm in August 2021 will stay on momentarily to ensure a smooth transition.

Splitit non-executive chair, Dawn Robertson commented:

Nandan brings more than 20 years of experience and a powerful network within the payments and fintech space to Splitit. Given his background and record of innovation, we're extremely confident that he can unlock the growth potential of the company.

At the same time, we thank John Harper for his leadership and guidance as Interim CEO. Having a veteran retail executive at the helm over the past six months has helped us better understand merchants' needs and expectations and develop our business in ways that help our partners take full advantage of the market opportunities in front of them.

About the Splitit share price

Over the past 12 months, the Splitit share price has fallen by around 80%, with year to date down 8%.

When zooming out, its shares traded for as little as 20.5 cents when COVID-19 hit in March 2020. However, just 5 months later, the company's shares zipped to a record high of $1.93 on 31 August, before tumbling down again.

Based on today's price, Splitit presides a market capitalisation of roughly $107.96 million and has 469.37 million shares outstanding.

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Of course, not all shares are created equal. Some gained far more than the benchmark and some finished 2021 deep in the red.

Below we look at the 2 best and 2 worst performers on the All Ordinaries in the year just past.

2021's worst 2 performing All Ordinaries shares

The unwelcome prize for the worst performing All Ordinaries share in 2021 goes to buy now, pay later (BNPL) company Laybuy Holdings Ltd (ASX: LBY).

Investors broadly sold off BNPL shares in the latter half of the year, and the selling for Laybuy began in earnest back in February. Laybuy commenced trading in 2021 at $1.30 per share. By the closing bell on 31 December it was trading at 24 cents, down 82%. At the current share price, Laybuy has a market cap of $57 million.

Coming in a close second in the unwanted worst performing All Ordinaries category is fellow BNPL player, Splitit Ltd (ASX: SPT).

Splitit also fell prey to the shifting sentiments hitting the pay by instalment sector. The company kicked off the year just past trading at $1.30 and finished at 25 cents, down a painful 81%.

Investors likely also had an eye on the company's bottom line, which revealed FY21 losses of US$35.2 million, up from US$26.6 million in losses posted in FY20. At the current share price, Splitit has a market cap of $127 million.

Moving on to the biggest gainers on the All Ordinaries…

2021's top 2 performing ASX shares

Turning to the positive, the second best All Ordinaries share you could have held in 2021 was Cettire Ltd (ASX: CTT).

Which brings us to the best performing All Ordinaries share of 2021, Novonix Ltd (ASX: NVX).

Involved in graphite exploration and mining, battery technology, and battery materials, the company was a clear winner in the booming growth witnessed in the lithium-ion battery industry.

Novonix kicked off 2021 trading for $1.21 per share and finished the year at $9.19 per share for an eye-popping gain of 660%. At the current share price, the best All Ordinaries performer of 2021 has a market cap of $4.8 billion.

The post Can you guess the best and worst All Ordinaries performers of 2021? appeared first on The Motley Fool Australia.