Oct. 23 at 7:51 PM
Consumer-lending stocks have taken a hit following bankruptcies of subprime lenders Tricolor and PrimaLend, raising investor concerns about exposure to high-risk borrowers. Pagaya Technologies has fallen 33%, Upstart down 26%, Affirm -22%, Klarna -17%, and Sofi down 8%.
Together, these companies lost
$17.4B in market value as of Wednesday, though stocks recovered somewhat on Thursday but remain far from prior levels.
Morgan Stanley analysts maintain a positive long-term outlook on buy now, pay later (BNPL) services, highlighting that U.S. BNPL purchase volume grew at a ~68% CAGR from 2019 to 2024. BNPL growth could continue as companies expand partners and zero-interest loans become more widespread. Analysts note the sector’s success depends on attracting higher-income consumers with stronger credit scores, despite current loan-performance challenges.
$PGY $AFRM $SOFI $MS