I think your first paragraph was true for 2020-2021, because debt was cheap and money was easy - no wonder quasi-lending businesses mooned. But so long as inflation/interest rates head upwards, sentiment swings won’t sustain a sector. The whole payments space is a example of this - I posted a table earlier showing they’re trading on 2.9x FY21 revenues on average, and even at these prices IOU is sitting at 10.7x FY21 revenues.
The ASX BNPL sector could become a classroom example of what happens when positive sentiment overruns sensibility, as many of us learned. The problem is that in such a small space - only a handful of listed players on the ASX - there will be a lot of ‘tarring with the same brush’. The headline numbers for AFRM, APT/SQ, SZL, ZIP and so on seem to control sentiment for the rest. Unlike many, IOU has been judicious with their bad debts, but that has clearly cost them on the growth front. The upcoming 4C will be illuminating.
IOU Price at posting:
14.5¢ Sentiment: None Disclosure: Not Held
(20min delay)