No respite here.
The Connected Economy 100 (CE100) Stock Index was off 3.7% for the week — though its performance was better than the major benchmarks, which all slipped by about 4% or more.
CE100 Relative Performance
At first glance, the main culprit might be the rout we saw on Friday, as stocks plummeted in the wake of comments from Fed Chair Jerome Powell, who said the battle against inflation will be a long and painful one and interest rates are destined to keep rising.
The struggle our CE100 names are having — well, that’s apparent in the 29.4% drop seen year to date. Each of our pillars ended lower on the week, led by the Communications group, off 8.6%, and the Pay and be Paid sector, which lost 6.1%.
Within the payments segment that we track, concerns over the resilience of buy now, pay later (BNPL) — and specifically, consumer spending — helped dent shares in some marquee names in the industry.
BNPL Names Lead to the Downside
Within those two groups, Affirm led the names that lost ground, off 20% on the heels of earnings results that disappointed investors, though we noted here that the long-term trends for buy now, pay later remain intact.
The company’s total transactions were up 139% in the latest quarter, and its transactions per active user rose 31%, compared to an 8% growth rate a year ago. Repeat business was in evidence, as the typical BNPL user did three transactions during the quarter, up from two a year ago. Affirm said 85% of the consumers transacting across its platform are repeat customers.
But seasonality will result in a decline in revenue as a percent of GMV. GMV guidance of $20.5 billion to $22 billion would imply 20% to around 41% growth from the most recent fiscal year, where that rate had been 77% in the most recent quarter.
Sezzle, also within the BNPL industry, lost about 17%, having announced the launch of a new direct integration with Klaviyo earlier this month.
Klaviyo is a customer platform that helps over 100,000 paying users maximize revenue, increase repeat sales and improve retention with personalized emails and SMS, per the announcement between the companies. In terms of the mechanics of the deal, by working with Sezzle, Klaviyo merchants are able to launch campaigns that include flexible financing messaging.
Withing communications, Zoom lost the most ground, having lost 18.2%. As reported by PYMNTS after Zoom posted earnings, the company’s online business (focused on smaller businesses and consumer accounts) has seen fewer new subscriptions, management said on the call.
That business should see a decline of as much as 7% to 8% in the current year. Larger enterprises are taking longer to close deals, according to management commentary.
Greg Tomb, Zoom’s president, said that larger transactions are seeing “extra sets of eyes” as deals go through. Total enterprise customer accounts came to 204,100, which equates to 18% growth year over year. That’s a marked slowdown from 160% seen five quarters ago.
Offset — a Bit — by the Enablers and Shopping Firms
These losses were blunted a bit by the Enablers and Shopping segments, which also slid on the week, off a relatively better 0.4% and 2.6%, respectively.
Snowflake soared by 28.% this past week, sitting at the top of the Enablers names. The company said in a presentation that it had seen 83% year-over-year product revenue growth. The company also said that it had 36% growth in larger enterprise customers, as more firms embrace the cloud to manage data more efficiently.
Elsewhere, within the shopping pantheon, Pinduoduo gathered 25%. As reported, the Chinese eCommerce firm is expanding its platform globally, with its first U.S. launch set for next month.