SINGAPORE (Reuters) – Shares in Australia’s Afterpay Ltd (APT.AX) and its smaller consumer lender rivals tumbled for a second day on Wednesday, as the entry of U.S. giant PayPal into the buy-now-pay-later sector sent investors scrambling to re-price its frothy stocks.

Afterpay fell as much as 12.4%, before paring losses, and has shed about A$2.4 billion ($1.8 billion)in market capitalisation in the two trading sessions since PayPal Holdings Inc (PYPL.O) said it would offer small, short-term loans to U.S. customers.

“Having such a large customer base already in the U.S., PayPal certainly throws a spanner in the works for their expansion plans,” said James Tao, a market analyst at CommSec in Sydney.

Rivals also tumbled, with Zip Co Ltd (Z1P.AX) dropping as far as 17.7% and Sezzle Inc (SZL.AX) 15.5% before both trimmed losses. They have each lost more than 23% in two days. Openpay Group Ltd (OPY.AX) and Splitit Ltd (SPT.AX) each fell about 9%.

Afterpay and other alternative credit firms, which offer small instalment loans to shoppers and make money by charging merchants a commission, are riding the boom in online shopping that has been sparked by the coronavirus pandemic.

The United States is regarded as the sector’s largest growth market and is a key focus for most of the Australia-listed buy-now-pay-later companies.

PayPal’s U.S. offering is a fee and interest-free loan for purchases between $30 and $600, repayable in four instalments over six weeks.

That is broadly similar to Afterpay’s product, which has proven popular enough among millennials to convince investors of its growth potential.

A 900% rally in the share price since March has catapulted the company into Australia’s top 20 largest listed firms, even though it has never turned a profit.

Afterpay, Zip Co, Sezzle, Openpay and Splitit did not immediately respond to emailed requests for comment. Zip Co’s CEO was quoted in the Australian Financial Review as saying his firm expected and is prepared for more competition.

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