3/30/2023 0 Comments Klarna slice it over 12 monthsThe 78 per cent fall in the value of Sezzle since it and Zip announced their merger on February 28 helps explain why the deal is off. While there may be value in BNPL as a provider of targeted marketing leads for merchants, it is far from clear how this competitive advantage can be turned into a sustainable, profitable model for the BNPL sector. But after Tuesday’s events, there can be no question the music has now stopped.Īs the industry’s biggest players attempt to reassess their balance between growth and survival, investors – from the mums and dads who rode the boom, to the venture capitalists who fuelled the sector’s largely profitless growth – must reassess the outlook for a sector that faces headwinds from rising interest rates, falling consumer spending and increasing regulation. With the benefit of hindsight, the BNPL party was probably over when Afterpay sold to Block (formerly Square) last August in a deal that was beautifully timed but poorly structured, given Block paid with its own stock. Then, on Tuesday morning in Sydney, local BNPL battler Zip announced it would terminate its much-hyped merger with ASX-listed rival Sezzle, with Zip paying Sezzle an $US11 million termination fee, equivalent to almost 5 per cent of its market value. Zip co-founder Larry Diamond Sezzle’s Charlie Youakim. It took less than eight hours for any last hopes of big returns from the buy now, pay later sector to be extinguished.įirst, from Stockholm, came confirmation that Commonwealth Bank-backed giant Klarna had raised $US800 million ($1.2 billion) in new capital at a valuation of just $US6.7 billion – 12 months after it was valued at $US45.6 billion.
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