CE100 Held On as BNPL Firms, Platforms Extend Losses

The week that was: a week that many investors wish had not been.

The Connected Economy 100 stock index did marginally better than the broader S&P — but less-bad is still not great.

As far as the headline numbers are concerned, the CE100 slipped 5.6%, while the S&P was off 6.3%.

CE100 Relative Performance

Source: PYMNTS

We’re in a trading environment where the “best” performers are the pillars that only dropped by 1.4% — in this case, the Eat pillar.  The next-best pillar was the Communicate segment, which slipped by 3.1%.

Pay and Be Paid Do Not Pay Off

On the other side of the spectrum, the Pay and Be Paid group plummeted by 9.6%.

And here is where some of the most dramatic trading action took place. Sezzle was slammed by 30%, followed by Porch, which gave up 21%, and then by Block, which lost 18.6%.

Porch’s decline might be seen in the context of worries about the housing market. As the Fed boosted rates by 75 basis points this week, interest rates paid on mortgages soared to their highest levels seen in 14 years.  At some point the balancing act between housing supply and demand will give way to headwinds that prove too tough to overcome.  There already are indications that the top of the real estate market has been reached.

And as for the BNPL space, PayPal has debuted PayPal Pay Monthly, an installment offering issued by WebBank.

See more: PayPal Launches Pay Monthly BNPL Offering

Customers can make purchases between $199 and $10,000, dividing the cost into payments over a six-month to two-year period, with the first payment due one month after purchase.

Read on: PayPal Answers Apple with BNPL Expansion

And of course, Apple now has joined the fray — an instant juggernaut, where Karen Webster noted that the company is entrant number 80 in the BNPL race. Apple’s decision to supply the loans directly off its balance sheet shows that having a cash hoard could firm immediate heft in BNPL.

See also: Is Apple Pay Later Really a Threat to Affirm and Other BNPL Providers?

It is the companies such as PayPal, with years of underwriting and credit experience, that may be best positioned to weather the economic storm that is brewing. After all, scale matters.  Block, as reported last month, has skin in the BNPL game, so to speak, as the company said on its most recent earnings call that BNPL — in the wake of its January acquisition of Afterpay — is helping generate repeat consumer transactions and increased conversion for sellers.

Read further: 13,000 Square Merchants Logged BNPL Sales in Q1

“We’re just getting started in integrating Afterpay and Cash App,” Dorsey said on an earnings call with analysts. “We plan to make BNPL available for in-person payments, soon, as well.”  With PayPal and Apple now more firmly in the competitive mix, the race for BNPL adherents may get a bit tougher.

You’d be hard pressed to find a name that showed some positive momentum this past week.

But one notable outperformer came through FedEx, which surged 11.3% for five day period, on the heels of news that it hiked its dividend by 53%.

But by and large?  The trend is down, and the end of the second quarter looms ahead.  Nothing remains certain but volatility.