‘Buy Now, Pay Later’ Players Step Up Advertising Spending In Market Grab

Affirm Holdings (AFRM) and other “buy now, pay later” consumer financing firms have upped advertising spending as they battle for market share. Affirm stock continues to trade in high volume as investors mull how much of a threat BNPL services are to credit card networks.

According to MediaRadar, the four biggest providers of BNPL services spent $52 million on advertising in the first nine months of 2021. That was up 130% from the year earlier period.

Affirm advertising spending popped 1,000% while Klarna’s spending jumped 557%, said MediaRadar in a report released on Tuesday.

Afterpay and PayPal Holdings (PYPL) also have upped ad spending. Square (SQ) recently acquired Afterpay.

“It’s still early days in this category and each company is well-funded and fighting for market share,” MediaRadar Chief Executive Todd Krizelman said in a news release.

Affirm Stock Slips, But Ranks Highly

Affirm stock slipped 1.7% to 154.55 on the stock market today. AFRM stock is extended above a buy zone. But AFRM stock is ranked No. 6 in the IBD 50 roster of growth stocks.

Competition in the BNPL market has been heating up. Most consumers tap buy now, pay later installment plans at online checkout.

BNPL services generally split interest-free payments into three or four equal installments over two months or less. BNPL companies increasingly generate sales themselves with in-app marketplaces and emails to consumers.

Companies like Affirm, and Affirm stock, benefit when online retailers generally pay BNPL players fees of 4% to 5% on transactions.

BNPL A Threat To Credit Cards?

The big question is how much transaction volume BNPL firms will siphon away from credit card networks such as Visa (V) and Mastercard (MA).

“We believe that in a reasonable ‘base case’ scenario, U.S. BNPL volumes could expand to $100 billion to $150 billion (about 5% of U.S. e-commerce spending) by 2025 — a 45% annual growth trajectory,” MoffettNathanson analyst Lisa Ellis said in a report to clients.

If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines.

IBD offers a broad range of growth stock lists, such as Leaderboard. Investors also can create watchlists for companies like Affirm stock, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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