A mighty surge in bad debts is upon the Australian buy now pay later sector.
Two months after Black Saturday sales and specials and a month after Christmas, the likes of Block, Zip Co, Openpay Humm and Latitude will be groaning under arrears.
BNPL has a feeble share of retail spending and payments and its importance is overblown. Its significant news stories are poorly reported, as Grant Halverson analyses here and here today.
The omicron ‘stay home, stay off the roads’ lockdown-like character of the post- Christmas period in Sydney and Melbourne is palpable.
Incomes have been shattered and the desperate and the crafty have exploited buy now pay later to the hilt. And now many of them cannot make payments, and it’s a forgiving capital market that Zip depends on to buy their way of their present dilemmas.
?Zip Co, like the whole BNPL sector is in trouble and buying Sezzle is noise on the way down and out.
Or up and at ‘em.
Zip has accumulated losses of A$660 million and an eye-watering burn rate, soon to be toxic. Sezzle’s accumulated losses of $83 million and burn rate are managed by throwing all their crud at Zip Co.
Zip, at $3.21 on Tuesday was worth a shade more than 50 per cent NTA.