Its shares have been on a tear recently, up 560% from their March lows, but more competition, apart from existing rivals such as Klarna and Sezzle, might drive down the fees it earns from merchants. For example, Shopify, which provides services to online stores, launched its own “buy now, pay later” feature last month.
Visits to Afterpay websites continued to grow in May, according to Citi, though that may slow this month as social-distancing measures ease. The world’s largest consumer market is clearly the dream arena for Afterpay, and it already had more active customers in the U.S. than in Australia and New Zealand as of March. The company has also gotten a key investor on board: Tencent disclosed last month that it bought a 5% stake in Afterpay. The Chinese technology giant is one of the two dominant digital-payments companies in China. Its rival, Alibaba’s finance affiliate Ant Financial, has also placed a bet on “buy now, pay later”: It bought a stake in Klarna, Afterpay’s Swedish rival, last year.