After the halting of ASX listings due to uncertainty caused by the coronavirus pandemic, the IPO markets has boomed in recent months where it’s now become more surprising for one to fall on listing, as was the case with BNPL provider Zebit (ASX: ZBT) in its first day on the boards.
Between their classification as a buy-now-pay-later company, and surging interest from Australians in fintech stocks, Zebit had the profile of a company expected to rise from their $1.58 Offer Price when trading commenced on ZBT yesterday. However, this was not the case with Zebit closing their first day as an ASX-listed company at $1.045, a 33.9% decline.
Successfully raising $35 million from their IPO, Zebit does not actually operate in Australia but rather focuses operations in the United States where they offer BNPL services to customers with six months to make interest-free repayments.
As of 30 September 2020, Zebit had approximately 661,000 registered users on their eCommerce Zebit Marketplace which offers more than 90,000 products.
“I founded Zebit in 2015 to make a fundamental and much needed change for millions of people in the U.S. who are in a perpetual struggle to get a foothold toward financial stability,” said Zebit’s Co-Founder, President and CEO, Marc Schneider.
“It is hard to imagine that an economic superpower such as the U.S. has 78% of its population living pay check to pay check and over 120 million consumers who have been effectively blocked from accessing cost-effective, “mainstream” credit because they either have no credit score or have experienced volatility in their lives that has contributed to an impaired score.”
For the six months ending 30 June 2020, Zebit generated $28.1 million in revenue for a net loss of $4.6m which is common amongst BNPL service providers.
In recent months, the ASX has been a popular exchange for public listings with New Zealand BNPL provider Laybuy Group (ASX: LBY) listing last month and closing their first day at $2.05 from a $1.41 IPO Offer Price (+44.6%). LBY shares have since come back to close yesterday at $1.64 suggesting that the investor appetite for loss-incurring BNPL stocks is waning as evidenced by Zebit.
Global payments conglomerate Paypal recently launched their own ‘Pay in 4’ BNPL service and is in the process of rolling it out to merchant partners in the United States.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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