Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

June 10, 2022 | Pain For Buy-Now-Pay-Later Loan Investors

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

Consumer layaway plans were popular in the debt-fueled boom before the market and economic crash of 1929. Every cycle, finance rolls out old leverage tricks enabling a near-term consumption bump by selling sketchy debts to indiscriminate investors. Same junk another day. Nothing new here; see Funding squeeze at buy-now-pay-later firm flashes warning:

Some of the riskiest loans given to millennials and Gen Z shoppers for clothes and electronics — and neatly repackaged for investors — are dropping in value.

Securitization packages of buy-now-pay-later loans from one provider, Affirm Holdings Inc., are falling in price for investors to buy while becoming more expensive to issue, after rising rates and a cost of living crisis cast a shadow over the sector.

Affirm has over 12.7 million customers and extended around US$3.9 billion of loans in the first three months of 2022. It was valued at US$47 billion in September after a blockbuster listing on Nasdaq in January 2021, but its shares have fallen over 80 per cent this year.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

June 10th, 2022

Posted In: Juggling Dynamite

Post a Comment:

Your email address will not be published.

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.