As Markets Fall, Large Corporations Fight Disruptive Growth Stocks – .

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As Markets Fall, Large Corporations Fight Disruptive Growth Stocks – .


The stock market fell on Tuesday as investors began to react negatively to sustained inflationary pressures. At the close, the S&P 500 (SNPINDEX: ^ GSPC) and Nasdaq Composite (NASDAQINDEX :^IXIC) were slightly below their record levels, and the Dow Jones Industrial Average (DJINDICES: ^ DJI) also gave back ground.

Index Percent change (decline) Point change
Dow

(0,31 %)

(107)

S&P 500

(0,35 %)

(15)

Nasdaq Composite

(0,38 %)

(56)

Data source: Yahoo! Finance.

For a long time, investors have followed the prospects of disruptive small businesses looking to take on some of the giants in their respective industries. Still, skeptics of these disruptors have long argued that it is only a matter of time before big companies hit back. It happened today at Affirm holdings (NASDAQ : AFRM), and it will be very interesting to see how things play out in a high-stakes battle for supremacy in a rapidly growing field of fintech.

Apple takes on Affirm

Affirm offers an installment payment service, better known as “buy now, pay later”. The Affirm service allows customers to choose from multiple options on how they want to repay, with some short-term deals adding little or no fees to the transaction, while some more extensive payment plans come with payouts. additional costs greater than the total cost. of the article. Affirm’s service has been very popular, especially as the company has partnered with companies such as the e-commerce platform provider. Shopify to give its merchant customers access to Affirm’s installment payment program.

Buying now and paying later is as easy as using your mobile device. Image source: Getty Images.

However, Affirm shares fell more than 10% at the close today, dipping mid-afternoon once news emerged that the company would likely face competition from a huge potential rival. Apple (NASDAQ : AAPL) reportedly intends to offer its own installment payment service, using its existing Apple Card relationship with the banking giant Goldman Sachs (NYSE : GS) and extend it so that the new buy now, pay later feature works.

The move apparently stems from Apple’s current offerings for buyers of iPhones and other Apple products. Apple cardholders can purchase iPhones in installments for two years, with payments coordinated with minimum credit card payments. Making a larger remittance service makes sense and is consistent with internal solutions that expand to cover larger areas of promising markets.

Prepare for more fights

Affirm isn’t the only company potentially vulnerable to existing industry giants fighting back against disruptors. Whole crowds of new top-flight companies will likely have to demonstrate their competitive advantages, even in the face of massive pressure.

For example, Holdings reached (NASDAQ : UPST) uses alternatives to credit scoring systems that I AM (NYSE: FICO) and others suggest. Upstart has proprietary artificial intelligence (AI) -based assessment tools to make more informed decisions about granting credit to those underserved by traditional credit providers. But nothing prevents FICO (also known as Fair Isaac) and other credit score providers from partnering with expert AI companies to create their own improved algorithms.

Many businesses have the same first-come advantage as Upstart, but face similar competitive challenges in the long run. That doesn’t necessarily mean disruptors are doomed to fail, but it does mean investors can’t just assume that massive mega-cap companies in key industries will just switch and give way to competition.

If Apple is indeed looking to take on Affirm, it might turn out to be just a first blow in a larger war between disruptive new startups and the big companies they are trying to make obsolete.

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