What to Expect From Affirm Holdings’ Q4 Earnings?

Affirm Holdings, Inc. (NASDAQ:AFRM) is a key player in the 'buy now, pay later' (BNPL) sector, offering consumers flexible payment options. The company competes with other BNPL providers like Afterpay and Klarna. On November 25, 2024, Robert O'Hare, Affirm's CFO, sold 79,039 shares of Class A Common Stock at $70.01 each, as reported on Form 4.

BofA Securities has shown confidence in Affirm by raising its price target to $74 and maintaining a Buy rating. This suggests that Affirm is well-positioned to capture more market share from its BNPL competitors. The stock's recent performance supports this view, with a current price of $69.35, up 4.21% or $2.80.

Affirm's stock has been on an upward trend for four weeks, partly due to the Federal Reserve's interest rate cuts and strategic partnerships with major companies. On Monday, the stock hit $62, its highest since February 2022, sparking discussions about potentially reaching $100. This optimism is reflected in the stock's recent high of $70.20.

At the FT Partners FinTech Conference on November 20, 2024, Affirm's Chief Revenue Officer, Wayne Pommen, discussed the company's strategies and performance. This event likely contributed to the positive sentiment around the stock, which has seen a trading volume of 8,142,052 shares today.

Affirm's market capitalization stands at approximately $21.78 billion, indicating its significant presence in the BNPL market. The stock's 52-week range shows a low of $22.25 and a high of $70.20, highlighting its recent strong performance and investor confidence in its future growth.

Wells Fargo analysts upgraded Affirm Holdings (NASDAQ:AFRM) to Overweight, raising the price target to $52 from $40, reflecting confidence in Affirm’s potential to capture an increasing share of eCommerce checkouts. As a result, shares closed with more than a 12% gain on Friday. With Affirm’s GAAP profitability expected soon, the stock valuation has become more appealing to investors.

The analysts highlighted Affirm’s advanced credit assessment and diverse funding programs, credit evaluation built into decision-making processes, and dynamic pricing that has established the company as a leading consumer lender, well-positioned for long-term 20%+ growth.

Affirm’s expanding growth opportunities, including its partnership with Apple Pay, are also noted as pivotal catalysts. Affirm could benefit from an easing rate cycle, which would improve growth potential and reduce funding costs. The Apple Pay Later initiative, expected to gain traction by mid-2025, presents additional potential, potentially boosting Affirm's 2026 Gross Merchandise Volume (GMV) by 10% and revenue by 8%.

Affirm Holdings (NASDAQ:AFRM) saw its shares jump over 7% intra-day today after BTIG analysts upgraded the stock from Neutral to Buy, citing the company's trajectory towards GAAP profitability and increasing dominance in point-of-sale financing. Analysts noted Affirm’s fiscal 2025 operating income margin is projected to reach 19%, closing in on American Express's 20% margin, with potential for Affirm to exceed this target as expense growth is expected to remain moderate.

The analysts highlighted Affirm’s increasing market share in the point-of-sale finance sector, fueled by rising demand for buy-now-pay-later (BNPL) solutions amid macroeconomic pressures, such as rising credit losses at traditional card companies like American Express. Affirm’s growing gross merchandise volume (GMV), supported by stronger merchant partnerships and consumer interest, is projected to grow 30% year-over-year in fiscal 2025, setting it apart from traditional credit card issuers.

The report also emphasized how broader shifts in consumer finance benefit Affirm, as traditional credit providers scale back due to adverse credit conditions. Additionally, new regulatory measures, including the Consumer Financial Protection Bureau’s updated late-fee rules, could make credit cards less appealing, potentially driving more consumers and merchants toward BNPL options. Affirm’s robust GMV growth, expanding margins, and strong retail partnerships, including with Walmart, reinforce BTIG’s bullish outlook on the company’s prospects.

• Barclays analyst Ramsey El-Assal has increased the price target for Affirm Holdings Inc. (NASDAQ:AFRM) to $54, indicating a potential upside of approximately 20.89%.
• Mizuho analysts have assigned Affirm an Outperform rating with an even higher price target of $65, reflecting optimism about the impact of lower interest rates on the company's business model.
• Despite a slight decrease of 0.58% in its stock price, Affirm's significant market capitalization and trading volume highlight its prominence in the fintech industry.

On Monday, September 23, 2024, Barclays analyst Ramsey El-Assal set a new price target for Affirm Holdings Inc. (NASDAQ:AFRM) at $54, up from its previous target, indicating a bullish stance on the stock with a potential upside of approximately 20.89% from its current trading price of $44.67. This adjustment reflects a growing confidence in Affirm's market position and future performance. Affirm, known for its "buy now, pay later" services, competes in a rapidly evolving fintech space, offering flexible payment solutions to consumers.

The optimism surrounding Affirm is not isolated to Barclays. Mizuho analysts have also expressed a positive outlook on the company, assigning it an Outperform rating with a price target of $65. This higher target suggests an even more bullish view on Affirm's potential, especially considering the benefits that lower interest rates could provide to its business model. Lower rates can reduce borrowing costs for companies like Affirm, potentially increasing their profitability and attractiveness to investors.

Despite these optimistic projections, Affirm's stock has seen a slight decrease of 0.58%, trading at $44.67. The stock's movement within the day ranged from a low of $44.63 to a high of $46.04, indicating some volatility. Over the past year, Affirm's shares have fluctuated significantly, with a low of $15.97 and a high of $52.48, showcasing the stock's potential for wide swings in price.

The company's market capitalization stands at approximately $13.9 billion, with a trading volume of about 7.35 million shares. This level of activity and valuation in the market underscores Affirm's significant presence in the fintech industry, despite the day-to-day fluctuations in its stock price. The interest from major financial analysts like those from Barclays and Mizuho highlights the potential they see in Affirm's business model and its ability to capitalize on the growing trend of flexible consumer financing.

Mizuho analysts raised their price target for Affirm Holdings (NASDAQ:AFRM) to $65 from $30 while maintaining a Buy rating on the stock.

In a recent investor note, they emphasized the rapid uptake of the "Affirm Card" and the projected 3-4 times increase in card spending for users with direct deposit. This, the analysts suggest, could significantly elevate their medium-term projections.

The analysts also pointed out a potential for surpassing management's ambitious $50 billion medium-term goal, with a "Blue Sky" scenario predicting around $55 billion by 2026.

The analysts anticipate that the focus of discussions around Affirm will shift from its Buy Now, Pay Later (BNPL) services and partnerships like the one with Walmart, towards Affirm's evolution into a comprehensive financial services company, incorporating direct deposits, savings, and more.

This rating change comes as Affirm's shares saw an over 15% increase in a single session following the announcement of an expanded partnership with Walmart.

Shares of Affirm (NASDAQ:AFRM) experienced an uptick in premarket trading today following an upgrade by Jefferies.

Jefferies analysts raised Affirm's rating to Hold from Underperform, highlighting the recent evidence of stabilizing credit risk, which they believe underscores the structural advantages of Affirm's product positioning.

The analysts also noted that the growth in adoption rates for "buy now, pay later" services is partly driven by current inflationary and macroeconomic factors. Affirm's business model allows customers to purchase items and defer payment, usually without incurring interest charges. This flexible payment option has become increasingly popular with online consumers. However, the Consumer Financial Protection Bureau has issued warnings about the potential risks for these borrowers, such as higher debt loads or a propensity for credit card delinquencies.

Additionally, this week's Cyber Monday spending reached record levels, partly attributed to the widespread use of the "buy now, pay later" option by retailers.

Affirm (NASDAQ:AFRM) shares jumped more than 8% intra-day today after Mizuho Securities analysts raised their price target on the company to $20.00 from $17.00 and reiterated their Buy rating, citing the growing traction of Debit+.

The analysts noted that Google Trends search data for Affirm’s Debit+ (a hybrid pay now, buy now, pay later debit card) looks promising. The analysts compared the increase in Debit+ searches to the early buzz surrounding Square's Cash Card in 2017.

Based on their bottom-up model, the analysts suggest that if Debit+ follows a similar trajectory as Square's Cash Card, it could potentially boost the company's medium-term volume compound annual growth rates (CAGRs) from the mid-20s to the mid-30s. While this may result in a dilution of revenue less transaction costs (RLTC) as a percentage of gross merchandise volume (GMV), the incremental volume and revenue growth are expected to be positive catalysts and help offset any potential sales challenges from upcoming student loan refinancing.