Your capital is at risk. CFDs can result in losses that exceed your initial deposit. Please ensure you fully understand the risks involved. Your capital is at risk. CFDs can result in losses that exceed your initial deposit. Please ensure you fully understand the risks involved.

Zip, Afterpay and Sezzle shares crash: here’s what drove the sell-off

The Zip share price and other ASX-listed BNPL stocks on Wednesday crashed following reports that Apple was looking to launch its own BNPL product.

BNPL in free-fall

Australian capital markets have attracted a flock of variable quality buy now pay later companies over the last few years. The list of such companies, non-exhaustively includes Afterpay, Zip, Sezzle, Splitit and Openpay.

Like US-based BNPL company Affirm, Australia’s cohort of BNPL leaders and rising stars fell hard on Wednesday, as the market recalibrates for elevated levels of competition. By 12:45 PM, Afterpay was down 8.69% to $108.07, Sezzle had dropped 9.7% to $8.01 per share and Zip had cratered over 10%, trading at $7.43 per share.

We look at the top 10 Australian BNPL stocks here.

Other ASX-listed BNPL companies such as Splitit and Openpay also saw their share prices decline off the back of these developments.

As we previously wrote, this all comes as reports emerge that Apple is looking to launch its own BNPL product, tentatively titled Apple Pay Later.

That product, as reported by Bloomberg, would allow customers to pay for purchases in installments via Apple Pay, both in-store and online. Two versions of the product are speculated to be in development: one short-term focused product, titled Apple Pay in 4, and a product which focuses on longer-term repayment arrangements, titled Apple Pay Monthly Installments.

Goldman Sachs is set to act as the lender for this product offering, though it should be noted that information on such a product has not been officially confirmed by either Apple or Goldman Sachs.

Do you have a view on the BNPL sector? Whatever you think, you can use CFDs to trade stocks and other assets, through IG’s world-class trading platform.

For example, to buy (long) or sell (short) the ASX-listed BNPL stocks we have discussed today using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter <Company name> in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

For investors not looking to trade stocks, you can invest in shares directly through our share trading service.

Other competitive pressure

It wasn’t just reports of Apple’s potential entrance into the market that likely spooked investors on Wednesday, with Macquarie on Wednesday reporting that PayPal was set to switch on its BNPL installment offering in Australia on June 15.

Here the investment bank made the point that PayPal’s installment offering would launch without late fees, arguing that such a move will likely be viewed positively by both merchants and customers.

‘We think Paypal’s move to offer no late fees is a strong move to encourage adoption of their pay-in-4 vs,’ Macquarie analysts said.

Macquarie's DFC valuation of Afterpay lowers from $140 per share to $130 per share when you remove late fees from the valuation equation. A price, it should be noted, which still stands firmly above where Afterpay last traded.

Looking at the competitive dynamics of the BNPL space moving forward, analysts from Macquarie said ‘we expect a period of consolidation within the industry before seeing a better outlook for the industry overall.’

New entrants in Australia's BNPL space include PayPal, Citi and StepPay.

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.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. All share prices are delayed by at least 20 minutes. Prices are indicative only.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.