Apple reveals 'BNPL' feature: 2 local providers trading close to cash

Apple has revealed a suite of new products and features at its Worldwide Developers Conference, including their very own buy now, pay later production - Apple Pay Later.

"Apple Pay Later provides users in the US with a seamless and secure way to split the cost of an Apple Pay purchase into four equal payments spread over six weeks, with zero interest and no fees of any kind," said senior director of Apple Wallet and Apple Pay, Corey Fugman.

“Apple Pay Later is available everywhere Apple Pay is accepted online or in-app, using the Mastercard network.”

The new product is powered by the Mastercard network and upcoming payments can be tracked through the Apple Wallet app on iOS.

Apple is also integrating order tracking directly into the Apple Wallet, enabling users to receive detailed receipts and order tracking information with participating merchants. eCommerce giant Shopify has been signed on as their first partner.

Apple has yet to clarify how the transaction will be financed. Although last July, Bloomberg reported that Apple Pay Later would use Goldman Sachs as the lender for the instalment loans.

Competitors dip

BNPL rival Affirm dipped -5.5% on the news. US-listed Block shares managed to weather the storm, closing 0.3% higher. 

It’s worth noting that Block is a diversified financial services and digital payments company, with products including Square terminals and the Cash app. 

Eyes on cash

Most ASX-listed BNPL stocks are down 80-90% in the last 12 months. Things are starting to get interesting as market caps begin to approach cash levels, notably:

• Laybuy (ASX: LBY)

  • Market cap: $19m

  • Cash: $12m (as at 31 March 2022)

• Openpay (ASX: OPY)

  • Market cap: $36m

  • Cash: $27.5m (as at 31 March 2022)

Trading below cash occurs when sentiment and growth prospects towards the company and/or industry is extremely poor.

At face value, a stock trading below cash can be an attractive proposition for value investors. However, there's quite a few obvious fundamental reasons as to why the stock(s) have been subject to such penalising discounts.