Latest news with #BuyNow
Yahoo
a day ago
- Business
- Yahoo
Klarna CEO predicts AI-driven job displacement will cause a recession
Klarna's CEO has predicted that a recession could be around the corner as companies around the globe—including his own—reduce the headcount of well-paid, white-collar jobs and replace them with AI. Sebastian Siemiatkowski, the boss of the Swedish Buy Now, Pay Later group is once again sounding a pessimistic tone on AI's impact on the workforce. But as he embraces the potential positive effects of AI on his own bottom line, he may have to contest with the negative fallout of a company that has flirted with growing credit losses in the last year. While he admitted that 'making future statements about macroeconomics is like horoscopes,' Siemiatkowski's well-documented feelings about AI's impact on the labor market leave him making a pessimistic prediction about the economy. 'My suspicion…is that there will be an implication for white-collar jobs. And when that happens, that usually leads to at least a recession in the short term. And I think, unfortunately, I don't see how we could avoid that with what's happening from a technology perspective,' Siemiatkowski said on the Times Tech Podcast. Siematkowski has long warned of the disruptive nature of AI on the labor market, using his experience of shifting recruiting practices at Klarna to support his argument that it will replace roles. He told the podcast that the company's headcount had fallen from 5,500 people to 3,000 in the space of two years. Speaking in August last year, Siematkowski said his ambition was to eventually reduce that figure to 2,000 through workplace norms like attrition rather than by engaging in layoffs. In February last year, Klarna announced that its AI chatbot was doing the work of 700 customer service staff, previously a role filled by customer service agents working for the French agency Teleperformance. While Siemiatkowski has faced criticism for his willingness to talk about AI's disruptive potential, he indicated he felt it was more of a duty to be frank about the technology. 'Many people in the tech industry, especially CEOs, tend to downplay the consequences of AI on jobs, white-collar jobs in particular. I don't want to be one of them.' Indeed, Siemiatkowski implied that if he added up the number of employees of CEOs who had called him to ask about making 'efficiencies,' that figure in itself would make for a seismic economic event. An AI-induced recession would combine a number of brewing themes for the Swedish tech group. Siemiatkowski's comments come as the group reported widening credit losses, which rose by 17% to $136 million last year. Siemiatkowski explained the losses as a result of the group taking on more customers, naturally leading to a rise in defaults. On a relative basis, the percentage increase in defaults was small, Siemiatkowski said. The Swede added that because Klarna customers' average indebtedness was £100, they were more likely to pay back their loans compared with typical credit card debt of what he said was £5,000. The typical U.K. credit card holder has an outstanding credit balance closer to around £1,800, while in the U.S., the average is about $6,300. Regardless of the variance, Siemiatkowski says the difference means customers are more likely to pay off their Klarna debts. 'We are very unsensitive to macroeconomic shifts. We can still see them, but they're much less profound than if you're a big bank, you have tons of mortgages. And for people to really increase losses, credit losses, what has to happen is people have to lose jobs.' Despite that, predictions of mass layoffs among white-collar workers could inform higher risk for the company's credit business. While there wasn't any sign of a recession currently, Siemiatkowski did observe falling consumer sentiment, which would impact spending. Siemiatkowski's views on AI in the labor force have evolved over time. Speaking to Bloomberg in May, Siemiatowski was reported to have said the company was embarking on a recruitment drive, contrary to his previous statements about a workforce reduction. Speaking with the Times, Siemiatkowski clarified that the company needed different types of workers to handle more complex customer service requests. 'When we started applying AI in our customer service, we realized that there will be a higher value to human connection,' he said. This story was originally featured on
Yahoo
03-06-2025
- Business
- Yahoo
PayPal Holdings (NasdaqGS:PYPL) Launches Physical Card For Flexible Payments Everywhere
PayPal Holdings saw a share price increase of 5% over the past month, a performance that stood out as the market overall rose by 2% during the same timeframe. The introduction of PayPal's new physical Credit card, announced on June 3, potentially bolstered this upward momentum by expanding customer payment options. Additionally, the launch of PayPal Complete Payments in Singapore supported the company's global expansion strategy. While the broader market trends suggest overall growth opportunities, these product launches would have added further weight to PayPal's favorable share price movements. Buy, Hold or Sell PayPal Holdings? View our complete analysis and fair value estimate and you decide. Find companies with promising cash flow potential yet trading below their fair value. PayPal Holdings' recent announcements, such as the launch of a new credit card and the rollout of Complete Payments in Singapore, could significantly influence its transformation into a commerce platform as outlined in the narrative. These developments expand PayPal's customer payment options and global footprint, potentially bolstering revenue and strengthening merchant relationships. The focus on personalized consumer experiences and smart wallet services aligns with PayPal's aim to enhance revenue streams beyond traditional payment processing, which is crucial given the competitive and regulatory challenges identified in the broader analysis. Over the past year, PayPal recorded a total return of 12%, including share price movements and dividends. This performance aligns with the general trends in the market, matching the US market's 11.9% rise but trailing the US Diversified Financial industry's 22% gain during the same period. Comparatively, PayPal's stock price remains below the consensus price target of US$82.32, indicating a 17.3% potential upside from the current price of US$68.05. These new initiatives may influence future revenue and earnings forecasts, especially if PayPal continues to expand its transaction volume and improve margins through enhancements such as the Buy Now, Pay Later service and other value-added offerings. Analysts project revenue growth at 5.2% per year, lower than the broader market's expected growth. Earnings are forecasted to rise to US$5.5 billion by 2028, with a profit margin increase to 14.5%. As PayPal continues implementing these changes, its relevance to the overall market expectations will remain closely watched. Nonetheless, PayPal's current stock valuation offers potential opportunities for investors to consider, provided the strategic initiatives deliver the anticipated benefits. Learn about PayPal Holdings' future growth trajectory here. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NasdaqGS:PYPL. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Sign in to access your portfolio
Business Insider
27-05-2025
- Business
- Business Insider
Affirm (AFRM) Navigates BNPL Paradox as Growing Pains Weigh on Sentiment
Affirm Holdings (AFRM) has experienced a volatile journey since its 2021 IPO. After soaring to bubble-level valuations, the Buy Now, Pay Later (BNPL) leader saw its stock fall to $9 per share in 2023. Since then, shares have been on a steady upward trajectory, driven by notable financial improvements. However, the current valuation suggests that investor expectations are now running high, setting the stage for its fiscal Q3 2025 earnings earlier this month, which delivered beats on both revenue and earnings per share. Confident Investing Starts Here: However, Affirm's guidance for its fiscal fourth quarter fell short of investor expectations, contributing to recent stock volatility. In my view, Affirm—and the broader BNPL sector—is caught in a strategic paradox: demand for BNPL services tends to rise during inflationary periods, yet these same economic conditions heighten investor focus on sustainable growth and profitability. This tension leads me to maintain a cautiously neutral stance on Affirm's stock. Why Consumers Are Flocking to BNPL in Today's Economy The Buy Now, Pay Later (BNPL) market is positioned for significant expansion in the years ahead, with Affirm competing among a handful of major players, including Klarna, PayPal, and Afterpay (now part of Block). In its fiscal third quarter, Affirm reported a 36% year-over-year increase in Gross Merchandise Volume (GMV), reaching $8.6 billion, driven primarily by rising transaction volumes and a growing base of active users. Current macroeconomic conditions—marked by persistent inflation and more cautious consumer spending—are accelerating BNPL adoption. The ability to break large purchases into smaller, manageable payments appeals to budget-conscious consumers seeking flexibility. Moreover, BNPL is becoming a familiar option for many shoppers, and emerging data suggests that some consumers are increasingly favoring these services over traditional credit cards, which often come with hidden fees and compounding interest. Guidance Miss Spooks AFRM Investors Affirm's fiscal fourth quarter revenue guidance—ranging from $815 million to $845 million—came in below consensus expectations, which were around $840 million at the midpoint. The market reacted swiftly, with the stock falling nearly 10% following the announcement. This response highlights just how sensitive Affirm's valuation remains to any signs of slowing growth. Beyond the disappointing guidance, broader market concerns are at play. While macroeconomic headwinds such as inflation may support increased BNPL adoption, they also amplify investor focus on financial durability. Key concerns include the risk of rising consumer defaults and Affirm's still-unproven path to consistent GAAP profitability. Despite recent operational progress, the company has yet to deliver the margin stability needed to fully reassure the market. Moreover, Affirm's stock performance appears increasingly influenced by market sentiment around its ability to navigate future economic uncertainty—particularly when forward-looking guidance falls short of expectations. While the company continues to pursue GAAP profitability, signs of slowing growth and a strategic emphasis on 0% APR financing may have raised investor concerns. Although these no-interest products appeal to higher-credit consumers with stronger income profiles, they are inherently less profitable than interest-bearing loans, potentially impacting near-term margins Fintechs, Banks, and Tech Giants Fight For Market Share As with any rising consumer trend, growing popularity inevitably attracts competition. The BNPL space is now populated by both dedicated fintech players, like Affirm, and established financial institutions eager to capitalize on the demand. In my view, the barriers to entry for large financial institutions are relatively low. Tech giants such as Apple and Google are integrating BNPL features directly into their ecosystems, potentially diminishing the relevance of standalone providers like Affirm. At the same time, major banks like JPMorgan Chase and Citibank are embedding BNPL-like options within existing credit card offerings, further intensifying competitive pressure. Is AFRM a Buy, Sell, or Hold? AFRM's average price target of $67.18 implies a potential upside of 36% in the next twelve months. Earlier this month, Wells Fargo analyst Andrew Bauch supported the bullish case for AFRM, issuing a Buy rating with a price target of $67. Bauch highlighted Affirm's strong GMV growth and was also encouraged by the 18% quarter-over-quarter growth in active cardholders. For context, the Affirm Card is a Visa card that permits full or split purchases, effectively becoming a more regular spending tool for consumers rather than just being used for individual online checkouts. Meanwhile, Morgan Stanley analyst James Faucette has a Hold rating on AFRM. He is cautiously optimistic on the stock, noting 'despite the macroeconomic volatility that poses risks to credit performance, Affirm's delinquency data remains strong, and insights from other consumer finance companies are generally positive.' Early BNPL Lead Meets Unproven Profit Path In summary, the BNPL market remains in its early stages, bringing both opportunity and risk. Affirm's early entry has helped build brand recognition, a growing user base, and strategic partnerships. With the overall market still expanding, there is significant upside if Affirm can capitalize on its foundation. For example, the company's card integration with platforms like Apple Pay enhances accessibility and broadens consumer reach. However, the path forward is far from certain. The BNPL sector faces meaningful regulatory and economic unknowns, having yet to be tested by a full economic downturn. The market is increasingly fragmented, and Affirm may need to prioritize brand differentiation, potentially at the expense of near-term profitability. Perhaps most importantly, its ability to consistently deliver GAAP profitability remains uncertain. In business, generating revenue is not enough—sustainable cash generation is what ensures survival. Overall, I remain neutral on Affirm (AFRM). At its current valuation, the stock appears to reflect both the growth potential and the underlying challenges of the BNPL paradox.
San Francisco Chronicle
24-05-2025
- Business
- San Francisco Chronicle
This type of loan is exploding in popularity — but experts say your credit card is still better
Buy Now, Pay Later lenders tout predictable payments and zero interest on purchases for those who don't want to — or can't — use a credit card. But data on both the companies that fund them and the people who use them show a troubling trend. In Klarna's most recent quarterly earnings report, the financial technology company said its net loss for the first three months of 2025 was $99 million, significantly worse than its $47 million loss for the quarter last year. The fintech reported $136 million just in consumer credit losses, which is business-speak for 'people not repaying their loans.' Those losses track with what surveys of Americans who use Buy Now, Pay Later loans have reported: People are having trouble paying them back. Matt Schulz, chief consumer finance analyst for loan comparison site LendingTree, has been overseeing its Buy Now, Pay Later tracker since 2021. It's an annual survey of a representative sample of 2,000 Americans asking about their experience with Buy Now, Pay Later (BNPL) loans. The most recent survey, published on May 5, found that 41% of people who'd taken out a BNPL loan had been late on a payment in the past year. In 2024, that number was 34%. 'The fact that 41% of Buy Now, Pay Later users say that they've paid late in the past year is really eye-opening,' Schulz said. 'It's confirmed for us that an awful lot of people pay late on these.' How BNPL loans work As data came in about borrowers using BNPL loans for everyday purchases like groceries, Schulz said he wanted to see how they functioned in practice. In April, he went on his phone and was able to secure five short-term loans in an hour from various BNPL lenders, including ones he could use at in-person stores. One app generated a virtual credit he used to buy shaving cream and a Mother's Day card at Target, and he used another app's virtual card to purchase a single bottle of Dr. Pepper and a jar of salsa at a grocery store — 'not what you would normally finance,' he said. BNPL loans were originally sold as an alternative to credit cards or taking out loans for big-ticket purchases. Things like furniture, appliances, gaming consoles and designer clothes could be broken up into four interest-free payments, typically due every two weeks, so you could spread out the payments across your upcoming paychecks — in theory, without going into debt. Over the last five years, use of these types of loans has exploded. Forty-nine percent of respondents to the LendingTree survey said they'd used them before. And the loans are being used to finance all kinds of things: A quarter of BNPL borrowers said they'd used them for groceries, according to LendingTree's tracker. Sixteen percent reported they'd used it to get takeout or delivery, a widely publicized option with Klarna and DoorDash. Around 60% of Coachella attendees this year said they'd used BNPL to pay for their tickets. Klarna reported a delinquency rate of 0.54%, up from 0.51% at this time last year. That delinquency rate is quite a bit lower than the national average for consumer loans, currently at a 10-year high of 2.77%. A report published in January by the Consumer Finance Protection Bureau said the decreased default rate is likely due to a structural difference on how you pay the loans back: Most BNPL borrowers are forced to set up automatic repayments from their bank accounts or credit cards. Though most BNPL loans are associated with short-term zero-interest installment loans, many lenders are branching out into longer terms with interest tacked on. Klarna's earnings report indicated 'strong uptake' of its more long-term financing products, including 6- and 12-month fixed-payment loans in the U.S. with a 19.99% APR. (For comparison, the average credit card APR this month is 24.28%, according to LendingTree.) Though they sell themselves as the anti-credit card, some BNPL lenders 'are becoming increasingly credit-card-like' with these types of offerings, said Ted Rossman, a senior industry analyst at financial comparison site Bankrate. Bankrate also recently published survey results about BNPL borrowers. Their results indicated 30% of Americans had used BNPL loans, and 16% of them had missed at least one payment. Delinquency rates are typically calculated by taking the number of loans that are delinquent (often defined as being 30 or 60 days past due, or two payments behind; Klarna does not publicly explain how it defines delinquency) divided by the total number of loans the lender has on the books. So while 41% of BNPL borrowers told LendingTree they'd been late on a payment, those loans might not be considered delinquent by the lender. And Rossman said the Bankrate survey asked borrowers whether they had ever missed a payment, while earnings reports typically calculate delinquencies within the past quarter or past year. Klarna's earnings report says delinquency trends are improving despite the overall rate being up. Many BNPL borrowers avoid falling too far behind because it means they won't have access to those loans any more, Rossman said. Klarna says it 'pauses' delinquent accounts. When does taking out a BNPL loan make sense? A short-term, zero-interest loan can make sense if, for instance, your car needs new tires, your refrigerator breaks down, or you need to buy groceries but your first paycheck from your new job won't land in your bank account for another week. But LendingTree found 23% of borrowers had three or more BNPL loans at once. And, financial experts say, that method of stacking them up or using them for nonessentials like takeout or concert tickets — isn't a smart financial move. Falling into the habit of using BNPL loans for everyday purchases means you might find yourself in a position where you have to keep taking them out because too much of your future paychecks are going toward last month's groceries. Amanda Henry, a Bay Area-based financial educator and career coach and author of 'The Financial Abundance Blueprint,' said that before someone takes out a BNPL loan, they should check in with themselves about whether it's a want or a need. If it is an emergency, explore getting a loan from a friend or family member. A credit card is typically a better option than a BNPL loan, said Schulz of LendingTree. A BNPL loan might sell itself as zero-interest, but if you rack up late fees, you might wind up paying even more in total than you would have carrying a balance for a couple months on a card. Credit cards also offer rewards, purchase protection and benefits to your credit score for on-time payments — upsides that BNPL loans lack. A secured credit card can be a good alternative for people who don't have access to traditional credit cards.
Qatar Tribune
21-05-2025
- Business
- Qatar Tribune
LuLu AI invests in PayLater Qatar
Tribune News Network Doha LuLu AI, the investment arm of LuLu Financial Holdings, has announced a strategic investment in PayLater Qatar, one of the first licensed Qatari providers of Buy Now, Pay Later (BNPL) and embedded finance solutions. This investment marks LuLu AI's first into the Qatari financial ecosystem and aligns with its broader vision of building a connected network of next-generation financial service providers across emerging markets. PayLater is a Qatar-based fintech innovator offering Buy Now, Pay Later (BNPL) solutions designed to make everyday purchases more accessible, affordable, and empowering. The company recently achieved a significant milestone by becoming the first recipient of a BNPL license from the Qatar Central Bank. 'LuLu AI is more than just an investment portfolio — we are shaping a future where financial services are intelligent, inclusive, and deeply human-centric,' said LuLu Financial Holdings MD Adeeb Ahamed. 'Every investment we make is a step toward empowering individuals and businesses with tools that simplify life and unlock opportunity and inclusivity. PayLater embodies this ethos, and we are pleased to be part of their mission to drive accessible and responsible financial solutions,' he said. 'This partnership with LuLu AI marks a major business milestone for us at PayLater. It's a shared belief in the future of responsible, flexible finance in Qatar,' said PayLater Co-Founder & Managing Director Mohammed Al Delaimi. 'LuLu AI brings regional scale and experience, and together, at PayLater, we're committed to building solutions that empower both consumers and merchants, while reinforcing Qatar's position as a fintech hub in the region,' he said. LuLu Alternative Investments was established to identify and back high-impact ventures that are solving real-world challenges in financial access, liquidity, compliance, and consumer experience. Its core thesis lies in leveraging capital to unlock capability — ensuring that startups have the runway to scale, the guidance to navigate regulatory landscapes, and the opportunity to collaborate across a trusted global network. By supporting firms like PayLater, LuLu AI is championing an inclusive and innovation-first approach to the digital economy.
