BNPL market wrap: Zip, Afterpay and Sezzle’s recent results compared

We compare and contrast some of the recent results and share price performances from Australia's leading buy now pay later (BNPL) companies.

March was a brutal month for Australia’s fast-growing buy now pay later (BNPL) darlings – as their share prices collapsed and worries about out-of-control bad debts filled the minds of investors.

These worries were not without merit, mind you. Many shoppers and indeed the BNPL providers themselves place a keen marketing emphasis on discretionary, primarily retail purchases. Such purchases, coupled with the potential for high unemployment, did not look like a match made in heaven.

The general argument was thus that people would probably be spending less on discretionary products during the throes of a pandemic and as a result, potentially be using the likes of Afterpay less.

Afterpay, Sezzle and Zip share prices surge off March lows

So far however, the above argument hasn’t really proven to be the case. Moreover – with the ASX-listed BNPL stocks in the last couple of months reporting that their all-important growth metrics remained intact, or in fact accelerated thus far during the Covid-19 pandemic – since their March lows, the likes of Sezzle, Afterpay and Zip have seen their share prices move significantly higher.

These extravagant price moves are shown on the table below:

Company

23 March Close

19 May Close

Implied move

Afterpay

$8.900

$42.00

371.9%

Zip

$1.225

$3.090

152.2%

Sezzle

$0.370

$2.250

508.1%

Recent results in focus

Indeed, while valuations may still be stretched across the sector, thus far the coronavirus pandemic hasn’t impacted Australia's listed BNPL platforms in the way many onlooks were expecting; nor impacted the metrics many investors seem to value these stocks on.

For example, for Sezzle's FY20 first quarter (Q1) results and on a year-over-year basis, ending 31 March, the company saw its:

  • Underlying merchant sales (UMS) hit US$119 million, up 321%
  • Merchant fees hit US$6.8 million, up 379%
  • Active customers hit 1,149,245, up 325%

More recently, Sezzle noted that its April trends were also strong, with the company recording April UMS of US$57.9 million, adding over 1,100 active merchants in that period and growing their active customer base by 114,000.

Elsewhere, Zip, providing the market with an impromptu update for the month ending 30 April – noted that on a year-over-year basis, the company also saw explosive growth across its key metrics, with:

  • Monthly revenue hitting $15.1 million, up 81%
  • Transaction volumes climbing to $181.6 million, up 86%
  • The company’s user base rising to 2.0 million, up 70,000 users in April

Finally, as part of Afterpay's own business update, handed down in May, the BNPL leader also revealed that growth had continued during the early parts of the Covid-19 pandemic. Specifically, for the period ending 31 March and on a year-over-year basis, Afterpay recorded:

  • Year-to-date underlying sales of $7.3 billion, up 105%
  • Active customers of 8.4 million, up 122%
  • Active merchants of ~48,400 up 78%

How to trade BNPL stocks

What do you think: have Australia’s premier buy now pay later stocks run too hard or will they continue to rise? Trade accordingly. For example, you can trade Afterpay shares – both LONG and SHORT – through IG’s world-class trading platform now.

To buy (long) or sell (short) Afterpay with CFDs, follow these simple steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘Afterpay’ or ‘APT' in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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