Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Beforepay tumbles on its ASX listing
Subscribers to the IPO of salary-advance fintech Beforepay (ASX: B4P) were left in shock following the company’s 40% tumble within the first hours of trade. Shares fell from the listing price of $3.41 to $2.20 by mid-afternoon, crushing any hopes of instant stock market success to become the next generation lender.
BeforePay is a pay-on-demand company offering users salary advances. It’s pitched as a platform that fills the gap for on-demand access to credit. It also provides a suite of budgeting tools and a pay cycle detection algorithm. Management suggests they have a unique credit risk assessment tool that reduces the risk of default.
Many, however, are questioning the business and what it does. The business claims it is not a Buy Now Pay Later (BNPL) product and has nothing in common with BNPL businesses like Afterpay. This is true. However, upon closer inspection, the business model appears to be a stock-standard payday lending product.
Pay-on-demand has become more like payday. A good example of payday lending is Cash Converters (ASX: CCV), which lends small amounts of money to borrowers. It then garnishees payment from the borrower’s next pay cheque.
As part of Beforepay’s IPO, the company raised $35 million and was left with 46.4 million shares.
So why did the collapse occur?
The massive fall was driven by an unfortunate operating update that was released at the same time as its listing. While pay advances were up to $77 million by the end of last year from $16.7 million, and its user base almost tripled to 139,000 members in FY21, write-offs and provisions totalled $5 million, against $4.5 million of income.
The previous year, the $48,000 in write-offs exceeded the $44,000 in revenues. But where things went bad is when Beforepay stated that it anticipates further losses as it doubles-down on Australian customer acquisition and dips its toes in to a possible US expansion. This flagged an uncertain future for pay-on-demand growth and triggered the panic selling by investors.
