🛍️ BNPL gets picky

Wednesday, November 8, 2023 by Snacks
Buy now, pay for the next year (Daniel Harvey Gonzalez/Getty Images)

Buy now, pay for the next year (Daniel Harvey Gonzalez/Getty Images)

Buy now, pay for the next year (Daniel Harvey Gonzalez/Getty Images)

Buy now, pay for the next year (Daniel Harvey Gonzalez/Getty Images)

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Hey Snackers,

When that Shein price looks too good to be true (even for Shein), beware: online shoppers are accidentally ordering teeny-tiny household items, like thumb-size Christmas trees and hangers that would only fit a doll’s clothes. That “small” label is very literal.

US stocks continued rising yesterday, with the S&P 500 and Nasdaq notching their longest win streak in two years as Treasury yields fell. Fed Chair Powell’s set to speak today.


1. BNPL giant Klarna returns to profitability after lenders tighten their IOU criteria

$200 jeans in 4 easy installments… girl/boy-maths out to $50. Buy now, pay later service Klarna just had its first profitable quarter in four years. But in the ecomm-obsessed US, Klarna’s been profitable for the past four quarters. Last quarter, US transactions through its service jumped 50% — versus a 22% bump overall. Klarna also shrank its total credit losses by 56% by being pickier about who it lends to. BNPL companies take on the risk of the loans they dole out, so when customers don’t pay up, they take a hit.

  • Up next: US rival Affirm reports today, which should give a broader picture of the BNPL market’s health.

Buy now, pay never?… BNPL services thrived during the pandemic as online shoppers snapped up air fryers and designer yoga pants. Klarna’s valuation ballooned to $46B in 2021, making it Europe’s most valuable startup. But with folks reining in spending, Klarna’s valuation plunged last year to $6.7B, and the company laid off 10% of its workforce. Meanwhile, regulators have said that half of those using BNPL services make purchases they can’t afford. A recent gov’t study found BNPL users had lower credit scores and higher rates of loan delinquency than the average shopper.


Being picky helps when things get sticky… Klarna’s made a point of being choosier about who it lends to, which helped shrink its credit losses. Banks are also tightening up their IOU criteria for everything from business loans to mortgages, as consumer debt balloons and savings dwindle (not to mention: high interest rates). Getting fewer but more reliable borrowers could help lenders curb losses during tight economic times.

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2. OpenAI announces a “Turbo” ChatGPT as it looks for fresh revenue in the bot race

Not a vacuum… At its first in-person event on Monday, OpenAI presented GPT-4 Turbo, an update to its popular large language model. The company said Turbo will have lots of bells and whistles, including a half dozen preset voices and the option for customers to create customized ChatGPT-powered bots. Picture: task-specific bots that can be listed for sale on a soon-to-launch GPT Store (like the App Store, but for AI). OpenAI said ChatGPT has 100M weekly users, but many use it for free.

  • How OpenAI makes $$: In addition to charging $20/month for its ChatGPT Plus subscription, OpenAI charges developers for access to its model.

  • Turbo opportunity: AI servers are incredibly pricey to run, and the GPT store could create an opp to boost revenue.

  • Due for an overhaul: Researchers said that Turbo’s predecessor, ChatGPT-4, had become less capable (aka: dumber) over time.

Turbochargin’ competition… OpenAI said that 92% of Fortune 500 companies use its platform, but it’s far from the only game in AI-ville. Elon Musk recently said that his xAI would release its own ChatGPT rival. Musk said the bot, called “Grok,” would eventually be available to paid X subscribers, and that it’d answer “spicy” questions. Also in the mix (* takes deep breath *): Google’s Bard, Anthropic’s Claude, Meta’s Meta AI, and scores of up-and-comers like Aleph Alpha, Inflection AI, and Cohere.


A crowded track can lead to crashes… As companies rush to get ahead in the AI race, collisions may be inevitable. Researchers said chatbots regularly make factual errors (when tested, Bard “hallucinated” 27% of the time). Experts say potential AI harm includes people being falsely ID’d as criminal suspects and AI-powered autonomous cars not accurately spotting pedestrians. Officials are paying attention. Last week, President Biden signed an exec order on AI safety.

What else we’re Snackin’

  • iRobot: China rolled out plans to mass-produce “disruptive” humanoid robots by 2025. Investment in automation is growing: Amazon’s testing “Digit” bot factory workers and Tesla’s developing its “Optimus” bot.

  • Opposite: Luxury-EV maker Lucid missed sales estimates and lowered its annual production guidance to between 8K and 8.5K cars, while e-truck rival Rivian beat expectations and boosted its forecast to 54K vehicles.

  • SAG: The Screen Actors Guild rejected Hollywood studios’ “last, best and final” contract offer, saying it doesn’t go far enough on AI protections. SAG has been on strike since July, halting myriad productions.

  • Gainz: Planet Fitness’ stock surged 12% after the gym chain reported better-than-expected profit and sales growth. It lifted its forecast and said it might hike the price of its $10 membership for the first time in three decades.

  • Arrived: Uber shares rose after the company delivered 11% revenue growth (less than expected) and an acceleration in gross bookings as ride-hail growth outpaced Eats. Uber swung to a profit from a loss a year ago.

Snack Fact of the Day

The average US commute is 27 minutes


  • Earnings expected from AMC, Beyond Meat, Biogen, Disney, Lyft, MGM Resorts, Roblox, Take-Two, Under Armour, and Warner Bros. Discovery

Authors of this Snacks own shares of: Amazon, Beyond Meat, Disney, Google, Tesla, and Uber

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