Want to cash in on an initial public offering perfect for holiday shopping? Fintech leader Affirm has your back. After confidentially filing with the U.S. Securities and Exchange Commission earlier in October, the company has made its IPO plans public yesterday. This means that the Affirm IPO will hit the stock market some time before the end of the year. What does this mean for investors? And what do you need to know about AFRM stock?
With those questions in mind, here are 13 things to know about the Affirm IPO.
- As a reminder, Affirm specializes in buy now, pay later solutions. This means it offers consumers a chance to purchase a higher-value product through payment installments.
- It has partnerships with e-commerce company Shopify (NYSE:SHOP) and top retailers like Peloton (NASDAQ:PTON) and Walmart (NYSE:WMT).
- Demand for its services quadrupled early on in the pandemic.
- Affirm initially filled to come public in early October.
- On Wednesday, it made its S-1 IPO prospectus public.
- Importantly, the company plans to trade on the Nasdaq Exchange under the ticker AFRM.
- At this point, Affirm is not releasing how many shares it plans to offer or the IPO price range.
- However, the company does plan to offer two share classes of common stock.
- Each share of Class A stock will come with one vote, while Class B shares will each come with 15 votes.
- Investors should know that CEO Max Levchin will retain voting control of the company.
- What about the financials? Affirm brought in $510 million in revenue for the last fiscal year.
- Importantly, this is a 93% jump year-over-year.
- Additionally, net losses for the quarter ending in September fell by almost 50% to $15.3 million.
Why the Affirm IPO Really Matters
As I wrote above, the novel coronavirus pandemic is behind much of the recent interest in Affirm. Importantly, consumer spending came to a halt as unemployment figures grew. That means for many retailers, demand plummeted. How do you bring that demand back? Well, according to Affirm and its BNPL peers, you make purchases more accessible. Instead of charging $100 for a one-time purchase of a product, offer consumers four interest-free payments of $25. This logic has perfectly played out.
In fact, as Dan Primack wrote for Axios, Affirm has found success with the market niches that we know work during the pandemic. Almost 30% of its sales for the fiscal year that ended in June came from Peloton alone. To investors, that should clarify the potential of at-home fitness. It should also show just how powerful Affirm is in making high-priced fitness equipment more accessible.
Importantly, fintech has been very hot leading up to 2020, and this trend should continue. We have seen similar interest in Klarna and Afterpay (OTCMKTS:AFTPY), meaning that Affirm could find success when it hits the Nasdaq Exchange. However, one thing for investors to watch is the pandemic impact. What happens when the world will return to normal? Will other retailers take the prominent spot of Peloton? Or will payment installments lose their sparkle?
Only time will tell. For now, know that the Affirm IPO is one to watch. The company plans to come public before the end of 2020, joining Airbnb and DoorDash in year-end debuts.
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 for InvestorPlace.com.