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Mizuho: Apple-Affirm partnership could boost gross merchandise volume by 35%

Investing.com - Mizuho, a global financial services firm, released a promising analysis of the recent collaboration between Affirm Holdings (NASDAQ:AFRM), Inc. and Apple (NASDAQ:AAPL) Pay on Thursday, noting that the new partnership could drive an incremental Buy Now, Pay Later (BNPL) opportunity worth around $12 billion for Affirm, representing a potential growth of 35% compared to fiscal year 2025 consensus volume estimates.

Mizuho's analysis suggests that the recent surge in Affirm's stock price following the announcement of the Apple Pay partnership could be justified, as the potential upside is not currently reflected in the stock.

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Analysts estimate that Apple Pay represents about $265 billion of e-commerce payment volumes in the US. This estimation is based on a recent report by Worldpay, which stated that Digital Wallets accounted for around $750 billion in the US volume in 2023. The primary wallets included in the report were PayPal (NASDAQ:PYPL), Google (NASDAQ:GOOGL) Pay, and Apple Pay.

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After subtracting an estimate for PayPal US Branded Checkout TPV, Mizuho suggests that the remaining $450 billion in volumes is split between Apple Pay and Google Pay. Using the approximate iPhone/Android mix in the US of 60/40 as a proxy, they estimate that the remaining e-commerce volumes consist of around $265 billion from Apple Pay.

With Worldpay's estimate for BNPL mix at around 5%, this implies a potential opportunity of converted Apple Pay volumes worth around $12 billion. This represents a potential upside of 35% to Affirm's consensus' FY25 Gross Merchandise Volume (GMV) estimate.

Mizuho maintains a 'Buy' rating for Affirm, with a price target of $65.

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