Afterpay (APT) Not Fazed By CommBank’s Klarna Move

The Afterpay Touch Group Ltd (ASX: APT) share price fell despite its CEO Anthony Eisen hinting that he’s not worried by Commonwealth Bank of Australia’s (ASX: CBA) push into the buy now, pay later (BNPL) industry.

Afterpay Touch is the owner of the popular “buy now, pay later” app. As of mid 2019, Afterpay had over 4.3 million registered users worldwide, making it one of Australia’s true technology success stories.

As part of Commonwealth Bank’s release of its FY19 result recently, Australia’s largest bank announced a major investment into European BNPL operator Klarna.

As part of its strategy to lead the local retail and commercial banking industry CBA had signed an agreement with Klarna, which is a global payments provider with more than 60 million customers and 130,000 merchants. Klarna generated revenue of US$627 million in 2018.

CBA invested US$100 million in parent Klarna Holding AB as part of its US$460 million capital raising. CBA will become Klarna’s exclusive partner in Australia and New Zealand and intends to further invest at the parent and local level to support the partnership.

As you can imagine, this could have a significant effect on Afterpay if Klarna were to become a sizeable player in the local BNPL market.

The Australian Financial Review reported that CBA CEO said one of its intentions was to lift standards in the sector.

But Mr Eisen was having none of that line of argument. The AFR quoted the Afterpay CEO said: “As the royal commission has proven, the banks do not set the standard for best practice.”

He expects Afterpay will continue to outperform the rest of the market: “The bulk of the way [Klarna] makes its money is applying a new skin to a traditional credit lending model. They are retro-fitting a customer-centric approach into an old model which is in a lot of ways broken.”

Time To Buy APT Shares?

The Afterpay share price fell slightly today.

Ultimately, I think it’s going to be a long, drawn-out conflict between Afterpay and other competitors. At the moment I’m not confident that Afterpay can achieve the growth expected of it in the coming years with all this new competition.

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here or enter your email address below to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just enter your email address below and we'll send you the report right away.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

CLICK HERE TO GET THE REPORT

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

General Financial Advice warning
The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

© Rask Australia 2020

Join 20,000+ smart investors

Join the Rask Australia mailing and we’ll send you free investment reports, podcasts, expert insights, investing courses, ASX news and lots, lots more. All free. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian-owned.

feedback-icon

What can we do better? Please give us us some feedback :)

We care about your experience, please let us know if you have any suggestions to improve our site.