Early days on BNPL Market analysis, I have included small loan lenders in the analysis as I believe they are pretty similar - i.e. they finance the small business in making a sale through Invoice Factoring. This adds Butn, Prospa, EarlyPay and Wisr into the mix.
Main take away is to determine whether to invest at all in the industry - there is a lot of red ink. Initially though, I wanted to look to see if the industry is growing overall. The BNPL industry is growing, however there will be an increase in participants this coming year - see chart from IBISWorld: The growing participants will be players like Apple, Latitude Pay and Klarna will continue to grow market share and others looking to enter the space. Believe there will be another look into the space by Latitude, Ahmed Fahour will not sit still and look to grow Latitude's market share in this space (should we consider a Latitude Financial investment?)
The market size by share of Australian Economy share size is forecast to grow a bit under 8%.
Here is the table (have excluded APT numbers after Square takeover): From my perspective this is what the table shows: 1. A lot of capital raisings still required to keep companies afloat 2. Humm Group appears to be the strongest in the Industry after the AfterPay business 3. It looks like it is worthwhile investing in similar types of businesses to companies in the BNPL space. These businesses tackle the Retail Sales dilemma from the reverse perspective of BNPL - they fund sales to the retail business rather than impinge on retail customers (is this a more ethical approach - not sure?)
While I was interested in B4P before the analysis, the one's that go onto my radar instead are BTN, EPY and PGL. Note: I have owned EPY in the past.
I would typically consider at the smaller end and go for BTN, however they are still making a loss.
From a cigar butt perspective, both PGL and BTN end up with more cash than market cap. Focus is likely to be here.
This approach also take into account whether the business is in the middle of a restructure and will likely improve profitability moving forward.
