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  • Writer's pictureAbacus Research

BNPL mega-trend

BNPL is a mega-trend. We view its adoption as inevitable. There is a $5Tn industry waiting to be disrupted and unable to compete. Our point is simply that BNPL is an attractive investment opportunity.

Our conclusion is that banks and credit cards cannot compete in the new world. AI driven lending decisions are instant, and much closer to the efficient frontier than incumbents can get today. To build an AI engine takes 3-5years, it cannot be rushed, it cannot be built using the data that banks have.

There are many additional reasons, but the summary is that BNPL companies have the market to themselves and can grow at very high rates for many years.

We would own PYPL which is on its way to becoming a super-app, and Afterpay (APT), but not Affirm (AFRM) until it is significantly (30%+) cheaper or engagement growth has been de-risked.

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