Wolfpack Financial enables you to purchase stocks free of charge — for now, anyway.
It’s a mobile financial-technology platform that’s bringing the concept of “buy now, pay later” to stock-market investing. Through Wolfpack, you can purchase stocks in big-name companies today, and pay for them over the course of several weeks.
The concept of buy now, pay later (BNPL, for short) isn’t groundbreaking. Consumers have been able to make purchases using this system for years. In fact, BNPL services have become incredibly popular — and valuable. Klarna, for example, has more than 150 million active users. And Affirm, another BNPL service, recently went public and is valued at around thirteen billion dollars.
But BNPL has never been used for buying stocks — at least, not exactly.
You see, just like your bank will lend you money against the equity you have in your home, a brokerage firm will lend you money against the value of your investment portfolio. The money it lends you is called a “margin loan.”
You can use this money for anything. But most use it to buy additional stocks or securities.
This is a big business. The U.S. stock market is worth about fourteen trillion dollars. And margin loans make up about $644 billion.
The problem is that margin loans can be risky. They can amplify your losses if the stocks go down in value. And if interest rates rise, the cost of your loan will increase. Furthermore, many investors can’t quality for a margin loan, which requires a strong credit history, a hefty deposit, and filling out a complex application form.
Now Wolfpack is offering an alternative option. Its product enables users to purchase stocks today and pay for them over the course of several weeks. Here’s how it works:
“Amanda” is twenty-two years old and just started her first job. She doesn’t have a FICO score and has just $500 in savings. So she wouldn’t qualify for a margin loan.
But with Wolfpack, she can purchase, say, $200 worth of Apple stock — and an additional $200 of Apple stock using BNPL.
To repay the $200 of stock she bought using BNPL, Amanda will need to repay twenty dollars per week for the next ten weeks. She can have the twenty dollars deducted from her bank account each week, or Wolfpack will automatically sell down twenty dollars’ worth of stock to cover the weekly repayment.
Wolfpack doesn’t charge fees or penalties for late payments. And it doesn’t extend loan terms. But it does charge interest and transaction fees at each repayment cycle. That’s how it generates revenue.
This new way to invest in stocks has potential for success. And historically, investors like when new alternatives emerge.
Robinhood, for example, gained popularity for offering commission-free trading, as well as a more “gamified” investing experience. As a result, the company became a ten-billion-dollar business.
Wolfpack launched its platform in 2022 and has more than 3,600 registered users. It’s also filed a provisional patent covering its technology and business model. And the company won the 2022 Benzinga Global Fintech Award for “Best Product for Beginners.” (The 2021 winner, by the way, was Robinhood.)