Today, investors in buy now, pay later company Affirm (NASDAQ:AFRM) have had a rough time. Affirm stock closed the day down 10.3% on higher-than-average volume.
This move is a continuation of some rather bearish momentum over the past couple of months. Since peaking in early November, Affirm stock has lost approximately half its market capitalization. Investors appear to be pricing in a rather negative outlook for Affirm, a company that had been on quite the winning streak until recently.
The rise of buy now, pay later services has taken the traditional financing market by storm. Consumer spending continues to soar, propelled by accommodative monetary policy and innovation around consumer credit. Affirm has allowed shoppers to defer payments for items which would normally be paid for in full. In doing so, companies can increase sales while reducing risks related to non-payment.
However, it appears a number of factors continue to plague Affirm today. Let’s dive into what’s going on with this stock.
Why Is Affirm Stock Taking a Hit Today?
Broadly, most tech stocks traded lower today. A range of factors were responsible for this decline, with many pointing to rising bond yields as a concern for the red-hot tech sector.
For Affirm, a company plagued by ongoing negative catalysts, this isn’t a good backdrop. Recent analyst downgrades have dampened the company’s outlook for both retail and institutional investors over the past couple months. Today, negative sentiment appears to be taking hold on social media, with many retail investors taking a bearish view of Affirm stock.
Additionally, concerns around regulatory risks tied to the buy now, pay later sector remain. In December, U.S. regulators opened a probe into Affirm and its peers. Whether this investigation will bear fruit or not remains to be seen. However, these factors certainly don’t paint a rosy picture for investors.
On the date of publication, Chris MacDonald 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.