I think bad debts are associated with fast expansion, lax on-boarding processes, ease of accessibility... all of which contribute to why Afterpay has been so much more popular than Zip... Its a double edged sword... which you have to live and die by.
One thing I will note is, the smartest analyst I know, whose Hong Kong based, reviewed things a while back, and mentioned to me that his view of this businesses bad debts are the opposite to yours, namely:
Bad debts we are seeing are relating to book size and business operations approximately 6 months prior, when they were originated and that we will only get a better understanding of the true % - which he believes are far higher, when growth slows.
By this theory, said bad debts, could apply to the business as it was at $100m or $150m steady state book... and if rampant growth slowed, that metaphorical big wake, thats 20 metres out the back of APTs high powered speed boat, all of a sudden gushes into and swamps its well appointed leather interior
He also made a valid point that, if they don't get their back office sorted, before things kick off in the US, write offs will be far worse over there... as the demand for lax credit is high... He claims there are 50-60 million people on food stamps alone in the US, a scary number... and lax consumer credit products have been heavily culled since the GFC, due to poor collect-ability... prior to which you could roll credit cards onto others etc. So if you can't get your collections right, you'll only exacerbate the issues there... and APT will just become a target for those in need.
@Warnie
