Buy now, pay later provider Zebit tanks on ASX debut

Buy now, pay later player Zebit has tanked on its ASX debut despite strong investor appetite in the sector, with the US outfit’s shares sliding over 30 per cent after listing.

Zebit hit the bourse on Monday with a listing price of $1.58 but its shares closed the session at $1.05. The disappointing debut followed the company dropping its listing price from a planned $2 a share to raise $42.9 million to $1.58 to raise $35 million.

Zebit founder and chief executive Marc Schneider said Zebit has a different customer to other buy now pay later providers.
Zebit founder and chief executive Marc Schneider said Zebit has a different customer to other buy now pay later providers.

However, Zebit founder and chief executive Marc Schneider said he wasn’t worried about “short term fluctuations”, adding that the company offered investors a different proposition to the host of BNPL players listed on the ASX, including Afterpay and Zip.

“We’re not very focused on valuation right now what we’re focused on is a long term commitment to this market and building valuation through execution,” Mr Schneider said.


“A lot of them (the BNPL companies) are focused on the same kind of market, the same consumer and replicating each other’s models,” he said.

Zebit is targeting consumers who would normally struggle to get affordable credit, primarily in the US market. While most BNPL providers take a 2 per cent or 3 per cent commission off the total transaction value Zebit’s model works differently.

“We make our money through the full gross margin, with a much larger consumer set where we’re not all competing for the same space in somebody else’s cart,” Mr Schneider said. “We have our own custom BNPL solution so we can capture the full gross margin… our gross margins are 27.5 per cent.”

He added that other BNPL providers were also moving towards similar models with Commonwealth Bank-backed by Klarna offering a rewards program and Zip and Sezzle offering virtual capped payments to capture their customers transactions offline.

“Everybody is doing exactly the same thing, but really the key at the end is what is their level of differentiation from a customer standpoint that’s going to allow them to have a sticky customer base?,” he said. “I don’t think any of those guys can talk about the types of customers that we have in terms of having customers in the cadre that have been with us one, two, three, four years and spend on average $1,000 a year and shop four to five times.”

Zebit’s listing followed Afterpay’s deal with Westpac to enable its customers to access banking services and came as rival Zip Co’s announced its acquisition of Aussie tech group Urge Holdings for up to $8.5 million to boost its lead referral generation for retailers.

Mr Schneider said Zebit had no plans to offer its products in Australia but the ASX was a solid place to raise growth capital.

“Look somebody is going to roll up the industry eventually because the space is getting super crowded with the same offering that’s not differentiated,” he said. “But my focus is really on a totally separate customer base that doesn’t qualify for those alternatives so I’m not really worried about customer leakage towards those models.”

Business Briefing

Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for the Herald‘s here and The Age‘s here.

Most Viewed in Business

Source: Thanks