The five stages of an asset bubble can be seen in all BNPL stocks
Phase One: Displacement. An event or innovation occurs that sharply changes expectations. This phase is typically grounded in reality and good intentions.
Phase Two: Expansion. This is the stage where the narrative takes hold and people begin bidding up asset prices.
Phase Three: Euphoria. By this point, all bets are off. Everyone assumes they can get rich easily and very quickly. Risk is taken with abandon and nobody worries about the hangover in the morning. During the dot-com bubble, this is the point where people decided they could make more money day trading IPOs than going to their day job. Euphoria makes people think the good times will last forever, or at the very least, they won’t be the ones holding the bag when it turns.
Phase Four: Crisis. The inevitable other side of any boom is a bust. This is the phase where the insiders begin selling, and panic buying quickly shifts to panic selling.
Phase Five: Contagion. Just as prices overshoot to the upside from euphoria, they often overshoot to the downside once the contagion of bad news spreads and people think things will never get better again
