For all the woes facing the BNPL sector,even the most sceptical analysts believe the “pay in four” method made famous by Afterpay is here to stay.
Zip has scrapped its merger with fellow buy now pay,later operator Sezzle as Klarna’s valuation falls and Assistant Treasurer Stephen Jones warns of new regulation.
As Zip Co’s share price continues to plunge,chief executive Larry Diamond argues the buy now,pay later provider’s business will be resilient to rising inflation.
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“Crazy” valuations for buy now,pay later companies have plummeted. Now investors are demanding proof these cash-burning businesses can make profits.
Diane Smith-Gander says the buy now pay later group has a positive story to tell but the entire sector missed a fundamental shift in the market.
Zip Co has signalled it will be more conservative in lending and will slash $30 million in costs as it looks to accelerate a plan to start making profits.
Many of the buy now,pay later firms that sought to replicate Afterpay’s success on the ASX have fallen on hard times. And analysts are forecasting more pain is on the way for these groups.
About 20 per cent of buy now,pay later customers used such services for essential goods and services such as food and utilities,a Choice survey found.
Zip says the deal will lift its scale and accelerate its path to profitability,as it faces tougher industry conditions.
Sezzle shares have surged after it emerged Zip was in talks with the company about a possible takeover.