Affirm Holdings (NASDAQ:AFRM) stock has become an explosive opportunity.
Since bottoming out around $46.50, AFRM ran to $145.43 – a gain of about 213%. All thanks to the buy now, pay later (BNPL) boom that shows no signs of slowing.
Expected industry growth is off the charts, too. According to Bank of America, the BNPL market could grow 10x to 15x by 2025, and could eventually process up to $1 trillion in transactions. It’s why PayPal (NASDAQ:PYPL) just bought BNPL company Paidy for $2.7 billion, and why Square (NYSE:SQ) bought Afterpay for $29 billion.
However, that’s just the start.
With a booming BNPL market, Affirm could see $200 a share, near-term – especially as it partners with the folks over at Amazon (NASDAQ:AMZN).
Affirm Holdings Upside Could be Unstoppable
Shares of Affirm Holdings went through the roof after announcing its flexible payment solution will be available to Amazon customers at checkout. With it, select Amazon customers can pay for purchases of $50 or more using Affirm’s monthly payment option.
That could really add up nicely for Affirm. In fact, consider this.
In the first six months of the year, Amazon raked in about $221.6 billion, up about 35% from last year. Also, Amazon sales could soar 40.4% this year after rising 39.8% in 2020, according to eMarketer contributor Blake Droesch. And finally, Affirm may now have access to Amazon’s 200 million prime members.
Another Affirm Holdings customer, Shopify (NYSE:SHOP) said that, “One out of four merchants observed a 50% higher average order volume with Shop Pay Installments.” RBC Capital Markets, as noted by CNBC, said a BNPL option can help increase retail conversion rates by 20% to 30%.
Even Target (NYSE:TGT) just partnered with Affirm Holdings for BNPL holiday shopping. This may only be the start, though. With more retailers likely to come on board, Affirm Holdings could easily race to $200, even $250 in the next few months.
Earnings Growth Has Been Just as Impressive
For Q4 2021, Affirm Holdings’ total revenue soared 71% to $261.8 million year over year. Gross merchandise volume, or GMV for the fourth quarter was $2.5 billion, a 106% increase from a year ago. For fiscal year 2021, GMV was up 79% to $8.3 billion. Active merchants grew 412% to about 29,000 in the quarter. Active customers jumped by 97% to 7.1 million.
“More consumers and merchants are continuing to choose Affirm because of our ability to offer a variety of ways to pay, thanks to our unrivaled technology. During the fourth quarter, we increased the number of merchants on our platform by more than fivefold, more than doubled gross merchandise volume and grew active consumers by 97% year over year,” said Affirm CEO Max Levchin said in a company press release.
Moving forward, the company expects to see Q1 2022 revenue fall in a range of $240 million to $250 million, which comes is above expectations for $233.9 million.
In short, we’re talking about massive potential growth here.
The Bottom Line on AFRM Stock
Affirm Holdings has become an explosive opportunity. With partnerships with heavyweights like Amazon, Shopify, and Target – with more likely – we could be looking at a $200 stock soon.
Even more impressive, earnings are only likely to improve with the buy now, pay later boom just starting to heat up.
I’d back up the truck on Affirm Holdings stock, especially as we near the 2021 holidays.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
