BNPL boom may fade

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Consumer loan provider Yesterday, Upstart Holdings released its first quarter results after the call. Thanks to this particular dataset, the company’s stock is down 53% in early trading today.

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What caused such a catastrophic accident? The company lowered its revenue growth forecast for the year and said rising lending rates appear to be dampening demand for its product. A slowdown in growth this year, a potential decline in net income and a market where interest rates are expected to rise even more have made Upstart unattractive to investors.

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Upstart’s bad leadership isn’t just hurting its own stock. Affirm’s share price also tumbled following the release of Upstart’s results. After falling 17.5% in regular hours yesterday, Affirm shares hit a 52-week low of $18.39 in morning trading. The company also received a downgrade from analysts this morning.

Affirm shares recovered to a more modest 5% drop in early trading today, but it’s clear that investors are tying Upstart’s results to Affirm’s value, which is a smart move since both offer unsecured consumer credit, even if their market movement differs. .

How much is your BNPL startup really worth?

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The shocking drop in the value of the two companies is only part of the story. There are a lot of startups in the BNPL market, which means that a lot of fintech was just grossly overvalued. Startups looking to get BNPL or a similar consumer loan product now have a much lower present value and a much steeper path to exit.

Market reaction aside, Upstart had a good first quarter. Let’s talk about the rest of the year and how much we should worry about BNPL startups going forward.


Credit: techcrunch.com /

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