Call me crazy, but the worst part of shopping is spending money. No matter how much you want a new coffee table, pair of shoes or an expensive video game, entering your credit card info hurts. Fintech companies specializing in buy now, pay later (BNPL) solutions are looking to change that. On the back of this trend, BNPL leader Affirm just filed to come public. Here is what you need to know about the upcoming Affirm IPO.
Importantly, Affirm filed confidentially with the U.S. Securities and Exchange Commission. This means that, at least right now, a lot of the details of its initial public offering are not available to investors. However, there is a lot to take away from this fintech leader.
To start, we have long been bullish on Affirm and its peers in our InvestorPlace.com live blogs. These buy now, pay later solutions have thrived during the novel coronavirus. Not sure about spending $100 all at once? What about four, interest-free payments of $25? That sounds a lot better! This backdrop is what is leading Affirm to come public, and its IPO looks hot.
Here are some fast facts:
- CEO Max Levchin is famous in the fintech world, and is a PayPal (NASDAQ:PYPL) co-founder.
- Affirm launched in 2013 to provide small loans to customers without credit history. Since then, it has grown to be a leader in BNPL solutions.
- The company says it has not yet determined how many shares it will offer, or what the IPO price range will be.
- Experts are unsure just how to value Affirm. Leading estimates put it between $3 billion and $10 billion, based on previous funding rounds.
- Backers include Thrive Capital, actor Ashton Kutcher and Sound Ventures.
- During the pandemic, Levchin said demand at Affirm quadrupled.
Why the Affirm IPO Really Matters
Consumer spending has been in focus amid the pandemic, especially as increased unemployment rates and stay-at-home orders have weighed on shopping. Companies like Affirm strive to get shoppers purchasing, incentivizing them with lower initial dollar amounts. According to Levchin, it works. Affirm boasts that it offers merchants a 20% improvement in repeat order rates, as well as an 85% improvement in average order value.
Investors will also likely appreciate that it has racked up some big partnerships. We previously commented on its deal with e-commerce leader Shopify (NYSE:SHOP). Together, the companies promise to help struggling merchants recruit new consumers and drive higher sales. During a pandemic, that is a top-notch selling point.
With an IPO just around the corner, look for more growth from Affirm. Big-name merchants like Peloton (NASDAQ:PTON), Purple (NASDAQ:PRPL), The RealReal (NASDAQ:REAL) and iRobot (NASDAQ:IRBT) all allow shoppers to use Affirm to complete transactions.
Consider a boom in fintech and BNPL solutions a pandemic silver lining. The Affirm IPO could be the brightest part.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer at InvestorPlace.com.