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Affirm (AFRM) has been replaced by Klarna as Walmart's (WMT) go-to "buy now, pay later" (BNPL) provider. Market Domination's Julie Hyman and BD8 Capital Partners CEO and CIO Barbara Doran report more on this news.
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affirm, the buy now pay later company, it hasn't been a good few days for the US, the US's largest firm in that space. Uh First, rival Klarna announced plans to file for its IPO on Friday. This morning, Walmart said that it was dropping a firm in favor of Klarna for buy now pay later purchases. Now, um, this basically, the way that this is going to work is that, um, if you use an app called One Pay to pay online at Walmart, the Klarna will be available through that. Um, Affirm, by the way, did say in a statement that Walmart was only about 5% of its gross merchandise volume, um, in the six months ended in December. So it is trying to downplay, um, its exposure to some extent here, but Affirm shares are down pretty sharply here. Um, and Barb, um, you know, Klarna is going to come public soon. We've got this buy now pay later space here. Is that a space that you're interested investing in, that you're following?
Well, yeah, I think it's it's got some very interesting secular tailwinds, you know, particularly if the economy is weakening. And if you look, it's very closely tied to consumer discretionary spending and e-commerce spending. And in that retail number this morning, which was up less than 1%, it was like what, 0.3? Yeah, the e-commerce sales were actually up 2.3 or something like that. And so it shows you e-commerce strength is continuing. And that's why the buy now pay later firms will do well. And and uh Affirm had just reported a blowout quarter last month. I mean, it was on firing on all cylinders, margins are expected to be coming up, and they're going to be expanding their their loan portfolio. So they've got a lot of growth ahead. So you've got secular tailwinds where the whole market size should continue to increase. And this one, it'll be interesting to see, um, if this is the start of something as they were gaining share against Klarna and other competitors. And so this may be a question where they just were not going to compete on price, you know, that the margins is going to be too thin. We don't know yet. So, you know, I think it's still very interesting and it may be a buying opportunity down here, but I want to hear more from management about this and what the actual, you know, proposal was because you wonder is it the start of losing share or not, but it's been a fabulous company and I think there's a lot of tailwinds to keep it going.