2019 is without a doubt the year of ‘buy now, pay later’ — or BNPL, as some would say.
Aussie investors, traders and analysts, have gone gaga for this new crop of fintech superstars. Stocks like Splitit Ltd [ASX:SPT], Zip Co Ltd [ASX:Z1P] and of course the granddaddy of them all: Afterpay Touch Group Ltd [ASX:APT].
Shoppers just can’t get enough of these new digital lay-buying services. Roughly 10% of all e-commerce purchases in Australia are now handled by Afterpay alone!
Retailers are also tapping into this buying bonanza. They’re reaping the rewards of increased spending as consumers willingly splurge more often. Some 30,600 merchants (and growing) now offer Afterpay as a payment option.
And it is this booming popularity that has resulted in some incredible returns.
Shares in Afterpay are up 128% since the start of 2019. Zip has done even better, up 213% year to date. While Splitit delivered a 426% return in just 42 days after its January debut!
The growth in this sector is downright mind-boggling. And everyone wants a piece of the action…
New kids on the block
Rivalry in this emerging fintech sector is fierce. New ideas spread fast, but competition spreads even faster. Hence why we’ve seen a slew of these buy now pay later rivals popup lately. But we’re not done yet.
Sezzle [ASX:SZL] is the latest addition to the growing list of ‘BNPL’ companies. A US-based, but Aussie listed fintech start-up that will officially begin trading today.
Market saturation clearly wasn’t an issue for early investors, though. Sezzle’s IPO was well over-subscribed. Easily raising $43.6 million from gung-ho buyers. The allure of growth it seems, has once again proved too powerful.
After all, Sezzle boasts some attractive stats. Merchant uptake, fees and number of customer all increased by close to or over 50% in the last quarter. The same signs that fuelled the success of other BNPL services before them.
Because of this, don’t be surprised if this stock kicks off with a bang.
It certainly would be on trend, that’s for sure. Less than three weeks ago, on 11 July, we saw another fintech debut. QuickFee Ltd [ASX:QFE] lit up the ASX with a 212% return within its first two days of trading.
Seriously, I can’t stress enough how insane that is. Granted, since QuickFee’s initial burst, its share price has come back down to Earth. Though it is still well above its IPO price.
For now, it seems there is no real end in sight for the extreme volatility we’re seeing in fintech. Expect to see more erratic ups and downs from these stocks in the near future.
In the long run though, I wouldn’t be surprised to see more of these smaller stocks breakthrough. They are the new breed of financial institutions. Companies that may eventually take on the old guard of finance (like the banks) and win.
We’ve already seen how quickly Afterpay has disrupted the industry. Just wait till there are a dozen more organisations just like it.
This is why I believe investor should be watching fintech stocks today. No other sector in my view presents the same incredible short and long term potential right. As long as you know which companies to look for…
Fortunately, I can help you with that. Here at Money Morning we have found three of the best fintech stocks on the ASX right now. Companies that are bringing a fresh take to old practices. I thoroughly recommend you check out our full report on them, for free, right here.
Analyst, Money Morning