Shares in Australia's Afterpay and its smaller consumer lender rivals tumbled for a second day on Wednesday, as the entry of US giant PayPal into the buy-now-pay-later sector sent investors scrambling to re-price its frothy stocks.[SINGAPORE] Shares in Australia's Afterpay and its smaller consumer lender rivals tumbled for a second day on Wednesday, as the entry of US giant PayPal into the buy-now-pay-later sector sent investors scrambling to re-price its frothy stocks.
Afterpay fell as much as 12.4 per cent, before paring losses, and has shed about A$2.4 billion in market capitalisation in the two trading sessions since PayPal Holdings said it would offer small, short-term loans to US customers. "Having such a large customer base already in the US, PayPal certainly throws a spanner in the works for their expansion plans," said James Tao, a market analyst at CommSec in Sydney.
Rivals also tumbled, with Zip Co Ltd dropping as far as 17.7 per cent and Sezzle Inc 15.5 per cent before both trimmed losses. They have each lost more than 23 per cent in two days. Openpay Group and Splitit each fell about 9 per cent. Afterpay and other alternative credit firms, which offer small instalment loans to shoppers and make money by charging merchants a commission, are riding the boom in online shopping that has been sparked by the coronavirus pandemic.