Hey mate, I actually don't think Apple joining the sector will have a particularly adverse effect on APT, Zip or SZL long-term to be honest, for a number of reasons:
- There's already been a few good articles put out that BNPL is not really a game Apple want to be in - they make billions upon billions of dollars in profits from their primary businesses - BNPL will just be another feature introduced into the Apple Pay product and ecosystem. They'll get a lot of people using their product, but so will all the major players. I mentioned in a previous post that you can't kill other BNPLs just by introducing another standard BNPL product - i.e. there has to be a reason for APT/Zip/SZL users to switch over and stop using their existing one, or to prevent new users signing up to the existing players. In a global market of hundreds of millions of potential customers where BNPL is only a fraction of transactions, it won't be a winner-takes-all game. Very very few industries are true winner-takes-all.
- PayPal have already attempted to crack into the market and have had absolutely no effect on growth rates for APT/Zip/SZL - now I acknowledge they are a different brand, but they're still a $US350bln company with already in place access to literally millions of merchants and customers, and still they've been unable to dislodge the incumbents. And honestly this crap about getting rid of late fees in Australia - I mean what?? What kind of competitive advantage is that?
- I agree with commentary and statements from the companies that the BNPL products will actually take market share from credit cards and banks, as opposed to each other. It's interesting the battle is often portrayed as APT vs Zip vs SZL, which is true to an extent, but in many ways it's actually Apple + APT + Zip + SZL vs credit cards + banks.
- In future we'll see Google Pay BNPL, Apple Pay BNPL, Amazon BNPL, Square BNPL, APT, Zip, SZL, and a number of others. The total addressable market is simply so massive that there will be viable businesses for a number of players. Not all will survive of course, but that's normal. I've placed a screenshot of a payment page from a retailer I know that offers multiple gateways at checkout - that's 6 options there, but I've seen many that will have Apple and Amazon pay also etc etc. That's not to say everyone will, but I think you'll see many retailers offer 2-3 BNPL options in addition to your standard credit card, Apple, Amazon, PayPal etc.
In regard to the shorts, they've definitely capitalised on this - as we discussed the short volume yesterday was about 6x higher than normal, which sort of says it all. It's unclear to me what will happen next here, but my hope is that many of the same people making money on the way down will be the ones that go long and also make money on the way back up sometimes soon. All I can say is that the quarterly next week would want to be f*cking magical, i.e. include something else other than just the results, otherwise it really should have been expedited and put out this week to get the headlines quickly off Apple and onto a good news story, the way Sezzle did today...
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