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Affirm (AFRM) Rises 12% on BNPL Report: What You Should Know

Affirm Holdings, Inc. AFRM shares jumped nearly 12% yesterday, prompted by a positive report on "buy now, pay later" (BNPL) trends from Adobe Analytics, coinciding with the commencement of the 2023 holiday shopping season. The deferred payment financial service is playing a major role in consumer spending resilience observed in recent times.

Per the report, during the Nov 1-Nov 26, 2023 period, purchases made with BNPL services have fueled about $7.3 billion in online spending. This marks a 14% year-over-year increase. Over the last weekend, $782 million in online spending was driven by BNPL, 20% growth from a year ago.

Economists were anticipating a slower holiday season this year as consumers continue to grapple with macroeconomic uncertainties, inflation and a high interest rate environment. However, BNPL, with its short-term interest-free loans, came to the rescue for budget-conscious shoppers. Investors chose Affirm as the company is expected to gain big from this trend with its growing network and reach.

In first-quarter fiscal 2024, Affirm’s active merchants climbed 8.7% year over year to 266,300, making it one of the most widely integrated BNPL platforms. This extensive reach will help the company to witness higher Gross Merchandise Volume (GMV) and transactions. Considering the growth in BNPL usage witnessed this month so far and the anticipated trends in the upcoming days, AFRM appears well-positioned to comfortably meet its financial projections.

The company projects achieving full fiscal year 2024 profitability on an adjusted operating income basis. Affirm forecasts a fiscal year 2024 GMV exceeding $24.25 billion, with an anticipated adjusted operating margin surpassing 5%. Revenues, as a percentage of GMV, are expected to be around 7.9%. For the second quarter of fiscal year 2024, Affirm anticipates GMV in the range of $6.7-$6.9 billion.

The Zacks Consensus Estimate for Affirm's fiscal year 2024 revenues stands at nearly $2 billion, indicating a substantial year-over-year increase of 25.4%. Additionally, the consensus estimate for earnings is set at 39 cents per share, signaling a noteworthy improvement of 111.7% compared to the previous year.

One-Year Price Performance

Over the past year, shares of Affirm have gained 133.4% compared with the 2.9% rise of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank & Other Key Picks

Affirm currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Business Services space are FirstCash Holdings, Inc. FCFS, Shift4 Payments, Inc. FOUR and RB Global, Inc. RBA. While FirstCash currently sports a Zacks Rank #1 (Strong Buy), Shift4 Payments and RB Global carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for FirstCash’s current year bottom line indicates 13.1% year-over-year growth. Headquartered in Fort Worth, TX, FCFS beat earnings estimates in all the past four quarters, with an average surprise of 7.9%.

The Zacks Consensus Estimate for Shift4 Payments’ current year earnings is pegged at $2.92 per share, which indicates 110.1% year-over-year growth. Allentown, PA-based FOUR beat earnings estimates in all of the past four quarters, with an average surprise of 25%.

The Zacks Consensus Estimate for RB Global’s current year bottom line suggests 6.6% year-over-year growth. Based in Westchester, IL, RBA beat earnings estimates in each of the past four quarters, with an average surprise of 18.9%.

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FirstCash Holdings, Inc. (FCFS) : Free Stock Analysis Report

RB Global, Inc. (RBA) : Free Stock Analysis Report

Shift4 Payments, Inc. (FOUR) : Free Stock Analysis Report

Affirm Holdings, Inc. (AFRM) : Free Stock Analysis Report

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Zacks Investment Research