I caught up with Jono Higgins late last week (our Analyst at Shaw) who covers BNPL with a specific focus on Zip Co (Z1P). Z1P currently resides in both the Flagship Growth & Emerging Companies Portfolios from lower levels, although it’s trading a long way from recent highs above $14. Jono is a Z1P bull, the most bullish in the market so some caution warranted, however, it’s a volatile beast as we’ve seen in recent times and is often thrown around by momentum traders. The key is all about growth rates in the US which is a huge market relative to our own. It’s why all the BNPL stocks are going hard at the land grab there.

Interesting news with Commonwealth Bank (CBA) announcing a pay in 4 instalment product, the first bank to do so-called CommBank BNPL – pretty original! CBA has been at the forefront of BNPL through its shareholding in Klarna, however, this product is another sign that the space is getting more competitive. As Jono suggests in the video, penetration in Australia is high, about 40% of Aussies have a BNPL account so the market here is mature. A significantly smaller portion of the ~330m Americans do, hence the incentive in that market.

This interview was published on 17 March 2021

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