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The Reddit meme stock fizzle is roiling an Australian penny stock.

IOUpay, a fintech firm that went into overdrive on a social media-backed retail trading frenzy, has plummeted in the past two months. The stock is set for more declines as the firm’s newly launched buy-now-pay-later services – which allow customers to purchase goods and then pay for them in instalments – faces intensified competition in south-east Asia from larger Australian rival Afterpay, say analysts.

IOUpay had drawn comparisons to US videogame retailer GameStop after surging 6400 per cent in the past year as it has been the subject of several discussion threads on Reddit. The Reddit-fuelled day-trading crowd turned the first quarter of this year into one of the wildest periods of sharemarket frenzy in modern history. Despite a more than 40 per cent slump since mid-February, IOUpay remains Asia’s top-performing interactive media and services stock over the past year.

“We may see the price subdued for a long period of time as retail investors get bored waiting and sell out to find something more exciting,” said Carl Capolingua, an analyst at online brokerage ThinkMarkets Australia. “The question will be if they can get traction in the Asian markets they’re targeting before the bigger players come in.”

Last year, Afterpay acquired Singapore-based business EmpatKali, a payment solutions provider operating in Indonesia, signalling plans to expand in south-east Asia.

The wild ride for IOUpay, which lists Standard Chartered and Citigroup as its clients, began in June after it was touted by investors on Reddit. Its shares continued gaining on a “buy now, pay later” deal with Malaysian online marketplace Easystore. That partnership inked in February sparked a more than 200 per cent rally in its stock over a three-day period.

Bloomberg