Simmer-Down Sunday: Apple Pay Later, But Who’s Buying?

Joseph Hargett

2 years ago

The Godfather Don BNPL Meme

Buy Now, Pay … Never?

Great Ones, we’ve talked enough about fear lately — some real legitimate terrors, like recessionary fears, supply chain worries and all that jazz.

‘Course, we’ve talked about some … how do we say this … less-than-usual fears, such as wading through a thrift shop’s sea of used Crocs and secondhand overalls to try and find something vaguely resembling style.

But the fear that “buy now, pay later” (BNPL) companies are feeling right now? Ooooh, that’s a way different kind of fear. It’s existential. And it’s all because of Apple (Nasdaq: AAPL).

You OK, Great Stuff? Something different in your cereal today?

See, we mentioned on Tuesday that Apple was venturing into the BNPL game. And by the end of the week, companies like Affirm (Nasdaq: AFRM) were still … still … feeling the shock waves from Apple encroaching into their turf.

Down 22% this week alone? Sounds about right — even with the ever-higher cost of goods and the willingness to overspend, these kinda-sorta-credit companies weren’t doing all that well in the first place.

Fellow BNPL lender Klarna was also shaking in its boots on the Apple news, though of course since it’s not publicly traded, we can’t exactly measure the fear there. Besides, no matter how much Klarna’s CEO brags that the BNPL competitor is “actually extremely recession-proof” … is it Apple-proof?

Remember what Great Stuff pointed out about these kinds of startups on Tuesday:

After all, these “buy now, pay later” companies have no moat — meaning there’s no barrier to entry for any of their services. A lot of big tech and bank companies can easily offer the same setup, skipping the middleman altogether.

So what do you get when you combine “no moat” and a teensy-weensy lil company called Apple? Yeah… Apple sees the “middleman” — any BNPL company, in this case — as profit-stealing competition that’s easily steamrolled.

With Apple’s wide user base and the platform’s walled-garden dynamics, it’s gonna be Death Star versus Alderaan levels of destruction here for firms like Affirm, Klarna and maybe even PayPal.

Apple’s lifeblood now is its services revenue, be it from the Apple Store, Apple Care or any other iService. Why not add more financial services to the mix?

Why wouldn’t Apple want to let users purchase useless junk even easier — and then owe Apple money at the end of the shopping spree? That’s revenue, baby!

Until Tim Cook and co. unleash Apple Pay Later on the world, it’s not exactly the end of Affirm or the other BNPL startups. But the end might be in sight…

And so the fear on Wall Street lurks — at least for any BNPL investors out there.

Thing is, what if instead of trying to feel out the levels of market fear all willy-nilly — we don’t have the Force, let’s face it — you had a real, battle-tested way to detect fear and greed?

Behold: Mike Carr’s new Greed Gauge.

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Even better? Mike’s got 20+ years of trading data to prove that his new strategy would have also delivered profits in seven of the last nine market downturns!

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