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So why is APT - and every other BNPL - losing a vast amount of...

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PigsMightFly

7,705 Posts.

2797

18/01/22

20:56

Post #: 58958640
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Originally posted by coppergaz: ↑

I think you missing one crucial point.

if you borrow $X amount for X% interest rate.

lets say $100k at 5% thus owing $105K after one year.
---(a loss of 5k)

APT then loan that amount and collect merchant fees say at an average of 4%. collecting back 104K
---(a profit of 4K)

● net result is a loss of 1K

BUT

remember APT dont loan it out just once in a one year period. its being loaned out 15+ times per year.

so 4% each time results in a return of
$4K multiplied by 15 is a return of $60K

net result is a profit of 55K

APT make 60% return on what they borrow while only owing 5% as a cost for borrowing.

The margin is massive.

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So why is APT - and every other BNPL - losing a vast amount of money every year?

It is because:
They have a double digit percentage of customers in arrears or default
Vast amounts of money are spent on acquiring new customers. [APT was even paying for referrals.]
Most customers spend almost nothing and generate little or no income.
APT Price at posting: $67.95 Sentiment: Hold Disclosure: Not Held
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