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BNPL stocks volatile, Zip records growth across key metrics in May

As the broader market falls and buy now pay later (BNPL) stocks trade with sharp volatility, we look at some of the highlights from Zip’s May update.

Key buy now pay later (BNPL) stocks – Zip, Afterpay, and Sezzle – faced steep selling pressure at the open on Friday, as the Australian markets played follow the leader with the US after a disastrous session overnight.

Indeed, this comes after the Dow Jones Industrial Average recorded a horror day on Thursday, falling a staggering 1,861 points or 6.9%. In step with that, the broader Australian market dove during the early portions of Friday’s session, falling to the 5,759 point level a little before 11am. The ASX 200 closed out the session down 112 points at the 5,847 point level.

BNPL stocks also plunged in the early hours of trade, though APT recovered much of these early losses by the afternoon session. Zip closed out the session at $6.30 (-3.52%), Afterpay at $51.86 (-0.46%) and Sezzle $3.050 at (-9.76%).

Zip share price dips, growth strong in May

Caught amongst general market volatility, Zip today announced that during May the company recorded growth across all of its key metrics, and impressively noted that there was 'No material change to the number of requests for hardship assistance, which peaked at the end of March (less than 0.08% of receivables.'

Overall, for the month ending 31 May, Zip saw its monthly revenue increase 78%, its monthly transaction volume increase 63% and its receivables climb to $1.2 billion, up 85% – on a year-over-year (YoY) basis.

The company also reported that total customers reached 2.1 million and total merchants reached ~23,600, as of 31 May.

Speaking of this release, Zip's CEO Larry Diamond said:

'May was another strong month for Zip – the performance of the business, both in terms of the continued strong transaction volume, and in particularly the outstanding repayment performance, demonstrates the resilience of the Zip business model.'

Finally and commenting on Zip’s May update as well as the BNPL sector as a whole, RBC analysts said in a note today:

‘The strong shift to online spending has benefitted Z1P and other BNPL players through the months of April and May as these companies acquire many customers at checkout.’

From a macro perspective, RBC analysts went on to say that:

‘The increased shift to online spending has also been reflected in trading commentary from both Australian and global ecommerce and payments businesses, which have generally noted improving trends and rebounding trends in May.’

Other bits and pieces

Elsewhere, US and Canadian-focused BNPL company Sezzle today announced that it is set to be included in the All Ordinaries index – effective 22 June. And Afterpay, seemingly ever defying the sceptics, hit a fresh all-time high on Wednesday, trading to a high of $54.850 per share.

How to trade BNPL stocks

Where do you stand: have Australia’s top 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 ‘APT’ or ‘Afterpay' 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

The information 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 Bank S.A. 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 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. See full non-independent research disclaimer.

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