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Affirm (AFRM - Free Report) is a Zack Rank #1 (Strong Buy) and is a financial services company that offers "buy now, pay later" solutions, allowing customers to make purchases and pay over time.
The company provides flexible payment plans, including interest-free options, across various merchants.
The stock returned from the dead after a 68% EPS beat in late August. The former triple-digit high-flying stock started flying again as of late, moving from $32 to $45 in a few days.
Since the post-earnings up move the stock has pulled back as much as 20%. So, the question for investors is whether the momentum can continue and take out the recent highs.
About the Company
Affirm was founded in 2012 and is headquartered in San Francisco, California. The stock is valued at $12 billion, and the company employs 2,000.
Affirm offers point-of-sale payment solutions, merchant commerce tools, and a consumer app. Its platform, supported by bank and capital market partnerships, allows customers to pay over time.
The company serves a wide range of merchants, including small businesses, large enterprises, and omnichannel brands across industries like sporting goods, home, travel, electronics, fashion, and general merchandise.
The stock has a Zacks Style Score of “A” in Momentum and “B” in Growth. However, the stock has a “F” in Value, which certainly keeps value investors away.
Q4 Earnings
In late August, AFRM reported a 69% EPS beat for Q4. Revenues came in at $659M v the $599M and the company raised Q1, as well as FY25 revenue guidance.
GMV (Gross Merchandise Volume) came in at $7.2B up 31% y/y. Both total active merchants and consumers were higher quarter over quarter.
Affirm's management reflected on achieving their goal of adjusted operating income profitability by the end of FY23, reporting $15 million in Q4 and $381 million for FY24, with $150 million earned in the fourth quarter. Looking ahead, they set a new goal of achieving GAAP profitability by the fourth quarter of FY25 and maintaining it moving forward.
Despite GMV being just over 2% of U.S. and Canadian e-commerce, they see significant growth opportunities. Their focus for FY25 includes scaling the Affirm Card, enhancing consumer engagement with personalized incentives, expanding into the UK, and rolling out new integrations.
Estimates Rising
Since reporting earnings, analysts have been lifting their earnings estimates and price targets.
For the current quarter, estimates went from -$0.53 to -$0.38. For the next quarter, they improved from -$0.41 to -$0.36
For the current year, numbers have gone from -$1.46 a month ago to -$0.82
While estimates remain negative for this year, next year we see that analysts are looking for $0.39, up from negative $0.95 just 30 days ago.
Since earnings, the stock has received several upgrades, including Barclays, which reiterated its Overweight rating and raised its price target from $41 to $50.
The Technical Take
When the stock IPO’s back in 2021, there was much excitement about the company. The stock IPO’d at $49 but opened significantly higher at $90.90. From there the stock climbed to $176.65.
However, a series of disappointing earnings reports, along with market weakness took the stock down in 2022. And in early 2023 the stock bottomed at $8.62.
Since that bottom, the stock made multiple attempts to return to its glory days. The rally in late 2023 helped the stock get to $50, but it fell back into the $20s again until the recent earnings report took AFRM back to $45.
This is a very volatile name, so an investor entry price is critical so let's go over some support areas.
The 200-day moving average is at $35.35.
The 21-day MA is $34.90.
The 50-day is $31.
The gap fill is $32.50.
Looking at Fibonacci levels can give us an upside target. The 61.8% level above $39, which can be found by drawing from February highs to August lows, has been broken by the bulls. The target is the 161.8% extension which is $66, or 60% above current trading levels.
In Summary
Affirm has shown strong growth potential, with management's focus on achieving profitability and expanding its market presence. With analysts raising estimates and multiple upgrades, Affirm's stock remains a high risk/reward play.
Strategic entry points and long-term vision could reward investors, but caution is needed given its past volatility and rapid price swings.
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Bull of the Day: Affirm (AFRM)
Affirm (AFRM - Free Report) is a Zack Rank #1 (Strong Buy) and is a financial services company that offers "buy now, pay later" solutions, allowing customers to make purchases and pay over time.
The company provides flexible payment plans, including interest-free options, across various merchants.
The stock returned from the dead after a 68% EPS beat in late August. The former triple-digit high-flying stock started flying again as of late, moving from $32 to $45 in a few days.
Since the post-earnings up move the stock has pulled back as much as 20%. So, the question for investors is whether the momentum can continue and take out the recent highs.
About the Company
Affirm was founded in 2012 and is headquartered in San Francisco, California. The stock is valued at $12 billion, and the company employs 2,000.
Affirm offers point-of-sale payment solutions, merchant commerce tools, and a consumer app. Its platform, supported by bank and capital market partnerships, allows customers to pay over time.
The company serves a wide range of merchants, including small businesses, large enterprises, and omnichannel brands across industries like sporting goods, home, travel, electronics, fashion, and general merchandise.
The stock has a Zacks Style Score of “A” in Momentum and “B” in Growth. However, the stock has a “F” in Value, which certainly keeps value investors away.
Q4 Earnings
In late August, AFRM reported a 69% EPS beat for Q4. Revenues came in at $659M v the $599M and the company raised Q1, as well as FY25 revenue guidance.
GMV (Gross Merchandise Volume) came in at $7.2B up 31% y/y. Both total active merchants and consumers were higher quarter over quarter.
Affirm's management reflected on achieving their goal of adjusted operating income profitability by the end of FY23, reporting $15 million in Q4 and $381 million for FY24, with $150 million earned in the fourth quarter. Looking ahead, they set a new goal of achieving GAAP profitability by the fourth quarter of FY25 and maintaining it moving forward.
Despite GMV being just over 2% of U.S. and Canadian e-commerce, they see significant growth opportunities. Their focus for FY25 includes scaling the Affirm Card, enhancing consumer engagement with personalized incentives, expanding into the UK, and rolling out new integrations.
Estimates Rising
Since reporting earnings, analysts have been lifting their earnings estimates and price targets.
For the current quarter, estimates went from -$0.53 to -$0.38. For the next quarter, they improved from -$0.41 to -$0.36
For the current year, numbers have gone from -$1.46 a month ago to -$0.82
While estimates remain negative for this year, next year we see that analysts are looking for $0.39, up from negative $0.95 just 30 days ago.
Affirm Holdings, Inc. Price and Consensus
Affirm Holdings, Inc. price-consensus-chart | Affirm Holdings, Inc. Quote
Since earnings, the stock has received several upgrades, including Barclays, which reiterated its Overweight rating and raised its price target from $41 to $50.
The Technical Take
When the stock IPO’s back in 2021, there was much excitement about the company. The stock IPO’d at $49 but opened significantly higher at $90.90. From there the stock climbed to $176.65.
However, a series of disappointing earnings reports, along with market weakness took the stock down in 2022. And in early 2023 the stock bottomed at $8.62.
Since that bottom, the stock made multiple attempts to return to its glory days. The rally in late 2023 helped the stock get to $50, but it fell back into the $20s again until the recent earnings report took AFRM back to $45.
This is a very volatile name, so an investor entry price is critical so let's go over some support areas.
The 200-day moving average is at $35.35.
The 21-day MA is $34.90.
The 50-day is $31.
The gap fill is $32.50.
Looking at Fibonacci levels can give us an upside target. The 61.8% level above $39, which can be found by drawing from February highs to August lows, has been broken by the bulls. The target is the 161.8% extension which is $66, or 60% above current trading levels.
In Summary
Affirm has shown strong growth potential, with management's focus on achieving profitability and expanding its market presence. With analysts raising estimates and multiple upgrades, Affirm's stock remains a high risk/reward play.
Strategic entry points and long-term vision could reward investors, but caution is needed given its past volatility and rapid price swings.