The owner of Afterpay, Block (ASX:XYZ), has seen its shares head towards a -3% drop intraday on Thursday as the market digests news of Klarna’s successful IPO overnight on U.S. markets – Klarna being a U.S.-grown Buy Now Pay Later (BNPL) fintech offering more or less the same service as Afterpay, except calling it ‘pay-in-4.’
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It’s a strikingly Australian familiarity, and that Klarna listed on the NYSE at US$40 before hitting nearly US$50 out the gate has been taken as a signal by many that BNPL may be back on the radar – at least for now.
According to MarketScreener, none other than Commonwealth Bank stands poised to benefit from the IPO – but by paring back its holding in Klarna once it listed, CBA could have missed out on a good thing. That may or may not explain why its shares were down on Thursday, too. At any rate, Australia’s biggest bank has a 5% stake in Klarna, which is unsurprising given the success of Afterpay and Block.
As for Block, it appears as if Klarna now stands as a serious competitor for the Australian company that exported BNPL. Klarna has had its own problems this year with unpaid debts racked up by users, but like Afterpay’s early days in Australia, those forces have proven unable to form part of the invisible hand.
Don’t forget Block itself listed (CDIs) on the S&P500 back in July. (I discussed this alongside HotCopper editor Isaac McIntyre two months ago on the HotCopper Wire).
For now, it looks like that isn’t factoring into investor calculus for those putting cash into Klarna. As for the Aussie-based Afterpay owner Block, heading into afternoon trades $7M worth of shares in Block had traded hands, but liquidity was below the four-week average (61.9K vs 209.3K respectively; Block shares are around A$111/sh.)
XYZ last traded at $111.46/sh.
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