'Buy Now, Pay Later' Is Hiding Consumer Pain

Jack Bowman8.89K FollowersFollow5ShareSavePlay(12min)Comment(1)SummaryBuy-now-pay-later (BNPL) firms like Affirm (AFRM), Klarna, and others are masking true consumer debt levels and obscuring underwriting risks.BNPL adoption is widespread across all demographics, with opaque reporting creating systemic risks for both BNPL firms and traditional lenders.FICO is updating its credit models to address BNPL, but industry buy-in and comprehensive reporting remain lacking, leaving credit risk underappreciated.I remain wary of consumer health and avoid BNPL-exposed firms, as these services may be papering over deeper economic and credit vulnerabilities. Gorlov/iStock via Getty Images In a recent article titled “The Consumer Is Tapping Out,” I discussed consumer health following a bad retail sales report, which was described as “flatlining” by the media, among other data that is showing consumers are becoming increasinglyThis article was written byJack Bowman8.89K FollowersFollowNewsletter Author | Investment Advisor | Top 5% of Experts on TipRanks | Long Signal, Short Noise | The Macro Obsession newsletter is a weekly brief on current events and trends in finance, tech, and the real economy. I am a macro-oriented and data-driven investor who obsesses over connecting dots that others don't see (or want to see), expressing my views through concentrated, asymmetrical, and high-conviction positions. I manage risk with discipline, often reminding investors that position sizing is often more important than security selection. I'm on a quest to uncover narrative trends before mainstream financial media, a process I've been describing as the hunt for information alpha. "Successful investing requires holding uncomfortably idiosyncratic positions." — Howard Marks, paraphrasing David Swensen "History does not repeat, it instructs." — Timothy Snyder, On TyrannyAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.