{"id":523590,"date":"2022-07-09T04:01:24","date_gmt":"2022-07-09T08:01:24","guid":{"rendered":"https:\/\/financhill.com\/blog\/?p=523590"},"modified":"2022-06-25T09:12:05","modified_gmt":"2022-06-25T13:12:05","slug":"apple-buy-now-pay-later-vs-affirm","status":"publish","type":"post","link":"https:\/\/financhill.com\/blog\/investing\/apple-buy-now-pay-later-vs-affirm","title":{"rendered":"RIP Affirm? Hello Apple BNPL"},"content":{"rendered":"<p><span style=\"text-align: justify; font-size: 1em;\"><em>Apple BNPL vs Affirm Stock<\/em>: So-called \u201cbuy now, pay later\u201d finance schemes have taken the world by storm over the last few years.<\/span><\/p>\n<div>\n<div style=\"text-align: justify;\">These short-term lending solutions have proven to be popular with tech-savvy millennial and Gen Z customers, whose aversion to traditional forms of consumer credit has opened up the possibility of a revolution for the rest of the industry.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">But while the market\u2019s appetite for additional BNPL products has grown, the threat of a global economic downturn has challenged the sector with some fairly severe headwinds.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">Indeed, BNPL\u2019s single largest operator, <strong>Affirm (<a href=\"https:\/\/financhill.com\/stocks\/nasdaq\/afrm\">NASDAQ:AFRM<\/a>)<\/strong>, recorded a whopping <a href=\"https:\/\/investors.affirm.com\/news-releases\/news-release-details\/affirm-reports-fiscal-year-2022-third-quarter-results\" target=\"_blank\" rel=\"noopener noreferrer\">$521 million loss<\/a> off of revenues of $985 million in the nine months ended March 31, 2022. If that wasn\u2019t bad enough, the company\u2019s operating margins also deteriorated, dropping from negative 44.3% in 2021 to negative 59.8% during the same period this year.<\/div>\n<\/div>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/AFRM?defaultOverlays=EMA20%2CSMA50&amp;defaultIndicators=ADL&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"500\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<div>\n<div style=\"text-align: justify;\">And it\u2019s not only Affirm that\u2019s suffering, either. Swedish outfit Klarna &#8211; the biggest privately-owned BNPL company in the business right now &#8211; is dealing with its own setbacks too. The firm had to <a href=\"https:\/\/blog.pragmaticengineer.com\/layoffs-at-klarna\/\" target=\"_blank\" rel=\"noopener noreferrer\">lay off around 10% of its staff<\/a> in May and, to make things worse, is facing an uncertain regulatory environment in the UK, one of its main territorial markets.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">Furthermore, investors seem to be getting cold feet with the sector at the present time, with many wary of the impact a looming recession will have on this relatively new and untested industry.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">And yet, into this maelstrom comes the world\u2019s largest company, <a href=\"https:\/\/financhill.com\/stocks\/sp500\/aapl\">Apple<\/a>.<\/div>\n<\/div>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/AAPL?defaultOverlays=EMA20%2CSMA50&amp;defaultIndicators=ADL&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"500\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<div>\n<div style=\"text-align: justify;\">More famous for its range of electronic tech devices such as the Apple iPhone and MacBook computer, the firm has just announced it is rolling out a new BNPL offering by way of its Apple Pay Later application.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">However, this development didn\u2019t come out of the blue, and Apple\u2019s vaunt into the BNPL space was anticipated as long ago as December 2020. Indeed, the company\u2019s most significant source of growth lately has been its burgeoning services segment, as its footprint in the music and video streaming sectors has continued to expand.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">Moreover, Apple\u2019s aspirations to create its own digital payment and financial settlements ecosystem make this latest move entirely understandable in the current context.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">But how does Apple plan on making an impact &#8211; and should its competitors have anything to fear?<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/images.unsplash.com\/photo-1556740738-b6a63e27c4df?ixlib=rb-1.2.1&amp;ixid=MnwxMjA3fDB8MHxwaG90by1wYWdlfHx8fGVufDB8fHx8&amp;auto=format&amp;fit=crop&amp;w=1170&amp;q=80\" alt=\"\" width=\"836\" height=\"557\"><\/div>\n<div><em>Source: Unsplash<\/em><\/div>\n<div>&nbsp;<\/div>\n<h2 style=\"text-align: justify;\">Who Are Apple\u2019s Main Rivals?<\/h2>\n<div style=\"text-align: justify;\">The \u201cbuy now, pay later\u201d credit industry appears to be teeming with a plethora of hungry companies at the moment, all competing for a slice of the $10 trillion global payments marketplace.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">That said, the sector is pretty concentrated when it comes to the key players in the space, with just three brands &#8211; Affirm, AfterPay and Klarna &#8211; accounting for the majority of customers using BNPL services.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">While these three companies have much in common, they each operate in fundamentally different ways.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">For example, AfterPay &#8211; which was bought out by <strong>Block (<a href=\"https:\/\/financhill.com\/stocks\/nyse\/sq\">NYSE:SQ<\/a>)<\/strong> in 2021 &#8211; specializes in smaller overall transaction types, charging merchants a fee for using its application, meaning it can offer customers zero interest on any purchases they choose to make.<\/div>\n<\/div>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/SQ?defaultOverlays=EMA20%2CSMA50&amp;defaultIndicators=ADL&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"500\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<div>\n<div style=\"text-align: justify;\">Alternatively, Affirm\u2019s lending terms are more flexible, with longer pay-off times but higher associated interest rates.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">Klarna, on the other hand, <a href=\"https:\/\/www.klarna.com\/uk\/blog\/the-questions-on-your-lips-how-does-klarna-make-money\/\" target=\"_blank\" rel=\"noopener noreferrer\">blends these two approaches<\/a>, offering a brace of interest-free options featuring no late payment penalties, as well as one other product that mixes retailer fees with a small interest charge for those needing to make more expensive buys.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<h2 style=\"text-align: justify;\">Apple\u2019s Long-term Strategy<\/h2>\n<div style=\"text-align: justify;\">The immediate reaction to Apple\u2019s entry into the \u201cbuy now, pay later\u201d sector might be to view it as a well-funded market predator looking to devour the big fish already operating in the space.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">But jousting with the present incumbents of the BNPL industry doesn\u2019t seem to be Apple\u2019s overall aim with the release of its new Apple Pay Later offering.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">Firstly, other pay-later firms have to struggle just to get their product in front of potential customers. As such, Affirm has secured lucrative integrations with both Amazon and Shopify, making it a payment option for consumers frequenting any one of over 200,000 online stores.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">However, Apple Pay Later is firmly rooted within the company\u2019s own digital wallet, Apple Pay, and iPhone users are encouraged to use the app whenever they purchase anything on its various platforms.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">This means Apple doesn\u2019t need to secure exclusive contracts like Affirm does, as it has an audience of 1.2 billion smartphone owners &#8211; and 500 million Apple Pay users &#8211; already there to market to.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">Secondly, Apple isn\u2019t targeting the same kind of customers that the typical BNPL provider is.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">For instance, studies on the spending power of Apple users consistently back up the idea that they\u2019re <a href=\"https:\/\/www.marketingdive.com\/news\/survey-iphone-owners-spend-more-have-higher-incomes-than-android-users\/541008\/\" target=\"_blank\" rel=\"noopener noreferrer\">more affluent than those who opt for other devices<\/a>, suggesting that the company isn\u2019t trying to lure away existing pay-later clientele, but instead simply getting its own base to use Apple Pay Later more often.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">In fact, Apple Pay Later is likely part of a multifaceted fintech play by Apple, one that is less a standalone product in its own right, but rather something that will integrate the entire universe of Apple applications further into users\u2019 everyday life.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<h2 style=\"text-align: justify;\">Should Other BNPL Providers Be Worried?<\/h2>\n<div style=\"text-align: justify;\">While Apple might not have the \u201cbuy now, pay later\u201d industry in its sights just yet, that doesn\u2019t mean it\u2019s still business as usual for the likes of Affirm and AfterPay.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">Indeed, operating conditions are getting worse for pretty much all firms in the lending sector today, with rising interest rates and higher numbers of defaulting customers putting pressure on company profits going forward.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">But for Apple &#8211; with its robust balance sheet and $51 billion to hand &#8211; the chance of weathering these difficult economic times is greatly improved.<\/div>\n<div style=\"text-align: justify;\">&nbsp;<\/div>\n<div style=\"text-align: justify;\">And that\u2019s not something you can say about many other industry enterprises right now.<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Apple BNPL vs Affirm Stock: So-called \u201cbuy now, pay later\u201d finance schemes have taken the world by storm over the last few years. These short-term lending solutions have proven to be popular with tech-savvy millennial and Gen Z customers, whose aversion to traditional forms of consumer credit has opened up the possibility of a revolution [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":523594,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[22],"tags":[359,312,346,703,334,337,331,372,350,425,637,352],"class_list":["post-523590","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-afrm","tag-aapl","tag-gic","tag-gpn","tag-ndaq","tag-dnow","tag-aone","tag-bpop","tag-shop","tag-sq","tag-upc","tag-view"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/financhill.com\/blog\/wp-content\/uploads\/2022\/07\/Untitled-design-2022-06-25T080819.921.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9czeV-2cd0","_links":{"self":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/523590","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/comments?post=523590"}],"version-history":[{"count":5,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/523590\/revisions"}],"predecessor-version":[{"id":523596,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/523590\/revisions\/523596"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media\/523594"}],"wp:attachment":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media?parent=523590"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/categories?post=523590"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/tags?post=523590"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}