Trades in the BNPL space this week
The ASX200 closed relatively flat on Thursday, up just 0.2% to 7341 points. The local exchange is up 1% over the last five days, continuing the incredible run of the just-finished financial year, which ended up 24% over twelve months.
Thursday’s biggest trades were in Zip Co (Z1P), the popular buy-now, pay-later company, with volumes exceeding the next most traded stock by 50%. It closed the day up nearly 14% on a story in the Australian Financial Review (AFR) that Swedish BNPL competitor Klarna had picked up 4% of the company, although neither Zip nor Klarna have confirmed the report. Klarna’s $A61bn valuation dwarfs that of Zip, which was worth roughly $5bn by close of business, fuelling speculation that Zip could be an attractive takeover target if the industry consolidates. Commonwealth Bank of Australia (CBA) holds a strategic stake in Klarna. Prior to today’s news, Zip jumped 6.5% on Wednesday. Nabtrade investors were small profit takers on Wednesday, and heavy sellers on Thursday; Z1P remains one of the platform’s most researched stocks and was in the top 10 most traded in 2020.
The excitement in Z1P spilled over somewhat into BNPL leader Afterpay Touch (APT), which rose 3% on Thursday. The Afterpay share price has jumped from $85 in May to over $120, leading to profit taking from nabtrade investors.
In other headlines, Sydney Airport (SYD) received a bid from the Sydney Aviation Alliance for $8.25 a share, a premium of 43% over the share price prior to the news. The share price spiked nearly 34% on the day, and another 3% on Thursday, as reports were released that Macquarie’s infrastructure arm may also be considering a bid. Nabtrade investors sold their positions into the rallying share price.
Fortescue Metals (FMG) continues to be heavily traded, with iron ore prices holding well above $200 a tonne and investors trimming the stock at current prices. BHP (BHP) and Rio Tinto (RIO) also feature in the top 20, with a bias to the sell side.
A2 Milk (A2M) has recently returned to favour after four profit downgrades in less than twelve months, up 40% from its lows of $5.02 in May. Larger investors have been trimming their positions, while smaller trades have tended to be buying. CSL Limited (CSL) has experienced the opposite; after rising above $305 just a month ago, it has sunk below $280 and opportunistic buyers are picking up holdings. Three of the big four banks round out the top 10; Westpac (WBC) and nab (NAB) were bought while CBA was a slight sell under $100.
On international markets, investors and traders continue to favour the US giants, with Tesla (TSLA.US), Apple (APPL.US) and Amazon (AMZN.US) taking out the three most traded spots. Zoom Video Communications (ZM.NASDAQ) also entered the top 5, as investors weigh with the likelihood of fewer face to face meetings and more tech-based communication. Zoom has climbed 30% over the last month, but at $US391 is still well off its highs of $588 in August, giving investors hope of further upside from today’s price.