Investing in buy now, pay later stocks: Analyst's 2 top picks

Buy Now Pay Later (BNPL) Market Overview - US e-commerce is approximately a $1 trillion business, with BNPL pushing $70-80 billion, a small fraction of the overall opportunity [2] - BNPL is mostly skewed towards a younger demographic, particularly the 18-34 cohort, who may not trust traditional credit cards or banks [3][4] - The growth of the BNPL market primarily impacts banks, as BNPL transactions are often settled using debit cards [9][10] BNPL and Economic Conditions - The common perception is that BNPL will struggle in a weak economy, but it could be countercyclical, helping retailers increase conversions [5][6][7] - Merchants may steer consumers towards BNPL to facilitate sales during economic downturns [7][8] Company Specific Analysis - Affirm (AFRM) is considered a buy due to its unlimited total addressable market (TAM) and strong execution, offering various payment options beyond just "pay in four" [12][14] - PayPal's (PYPL) buy now pay later offering is integrated into its branded checkout button, expected to drive growth, and is performing well in Europe [16][17][18] - Circle (USDC) is rated as underperform due to flat distribution of USDC at $68 billion and increasing distribution costs, impacting revenue potential [21][22]