Block (née Square) may not yet regret acquiring Afterpay. But it appears to be paying at least a short-term price for the decision to acquire the buy now, pay later platform for US$29 billion in stock last year.

The deal looks better from Afterpay’s perspective. Nesting within a larger, broader fintech like Block seems to have come just in the nick of time.

This week Block shared details of Afterpay’s six-month results ending December 31, 2021. And the picture wasn’t pretty. The most striking data point was that bad debt was up by 70% in the six months ending December 31, 2021, according to a report in Australia’s Financial Review newspaper. Afterpay’s late fees have also spiked, which may be a signal of more bad debt trouble ahead.

For the half-year, Afterpay posted a net loss after tax of $345.5 million. That’s up 336% from the $79.2 loss in the prior corresponding period. Afterpay’s total comprehensive loss, net of tax, of $298.99 million, up 133% for the same period a year ago.

Afterpay posted an operating loss of $263.7 million, up 287% on the prior period. All this on total income of $644.9 million.

Trouble All Over

These results throw wood on a smoldering fire surrounding the BNPL space. Stocks for BNPL companies have suffered recently. For example, U.S.-based Affirm has been under siege this year because of mounting losses.

Affirm’s share price peaked this year at around 74.68 on February 9. It then dropped to 26.22 in March. It has since recovered somewhat, closing today at 37.48. And it was buoyed by news today that it has extended its partnership with Poshmark for another two years. The deal gives Poshmark shoppers flexible payment options.

Also, Affirm CEO Max Levchin raised the company revenue guidance for the year, citing growing demand. For BNPL, the challenge is less about demand than the ability of American consumers to keep pace with payments on all these BNPL accounts.

We also wrote recently about how global BNPL leader Klarna’s seeming pivot away from the “buy now pay later” label. Klarna, which recently broke out its open banking unit into a separate business, wants to be seen more as a full-fledged fintech. The company likely wants to create some space between itself and its competitors before it pursues its long-anticipated IPO. Again, this may be driven by the industry’s growing “buy now, pay never” reputation.

And Klarna hasn’t been immune to this. Last year, we wrote about Klarna’s own struggles with

Still, it’s important to note that BNPL remains popular, as Affirm suggested when it bumped up its guidance last month. A March article in PYMNTS raised the question of whether banks will catch up and start presenting a challenge to the pure plays.

For example, the PYMNTS article cited a recent Bloomberg analysis that BNPL growth “could accelerate to 46% annually through 2024. But less may accrue to pure-plays Affirm, AfterPay and Klarna as traditional card issuers and processors add BNPL functionality to cards at the point of sale in 2022.”