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Affirm Still Doesn’t Reflect Its Payment Network’s Growth

San Francisco-based installment-payment broker Affirm (NASDAQ:AFRM) is sometimes known as a specialist in the “buy now, pay later” (BNPL) niche market. Some folks might consider this to be a promising industry to invest in, but lately AFRM stock has been in a rapid state of decline.

The website for Affirm (AFRM) is shown on a cellphone sitting atop a stack of $20 bills.

Source: Joaquin Corbalan P / Shutterstock.com

This isn’t to suggest Affirm’s investors have always struggled. As we’ll see, there was a powerful rally last year — though this might have been a case of “too much, too fast.”

On the other hand, investors might have overcorrected AFRM stock, which presents an opportunity for value hunters. Indeed, a deeper dive into Affirm’s financials suggest the company’s shares deserve a re-rating.

Not only that, but Affirm just announced its platform’s integration with an internet browser that I’m sure you’re familiar with. It’s yet another reason to bet on a share-price comeback, and possibly even a 2x or 3x rally this year.

A Closer Look at AFRM Stock

How could a 2x or 3x rally happen? First of all, consider that the 52-week range of AFRM stock is $31.78 to $176.65.

Granted, only people with perfect timing would have bought the shares at exactly $31.78. Still, the stock was recently trading in the low $40s, and a move to $80 or $120 isn’t out of the question.

It’s also probably reasonable to say AFRM stock’s rally from $70 — where it stayed for quite a while last year — to $170 was excessive. Affirm is a solid company, sure, but that buying frenzy just got out of hand.

Still, Wall Street’s treatment of Affirm lately has been brutal. Now, if you can buy the shares in the low $40s, consider it a gift from the markets but also have an exit strategy in case the trade goes against you.

Two Significant Additions

Just to recap, Affirm strives to provide a next-generation platform for digital and mobile-first commerce. The idea is to help consumers spend responsibly while enabling merchants to convert their sales and grow.

Speaking of growing, Affirm just disclosed two significant additions to the company’s already extensive suite of products/services.

The first one is not just an app, but the Affirm SuperApp. This, according to Affirm, delivers the best of the company’s “shopping, payments, and financial services in one easy-to-use destination.”

With its SuperApp, Affirm’s users will easily be able to manage their savings and payments, shop for exclusive offers from merchants, earn cash-back rewards and more.

The other major addition is Affirm’s new extension for Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Chrome browser. This extension will enable Affirm’s users to conveniently access the company’s payment solutions at “virtually any retailer’s website, even if Affirm isn’t listed as being available at checkout.”

People-First Commitment

Of course, providing a Chrome extension is a smart business strategy. Indeed, judging by Affirm’s recent financial data, it appears that the company has been making all the right moves lately.

The numbers are indisputable. During the fiscal 2022 second quarter ended Dec. 31, 2021, Affirm managed to increase its gross merchandise volume by 115% year-over-year, to $4.5 billion.

Moreover, Affirm grew its active merchant count from 8,000 to 168,000 during that time period. Additionally, the company expanded its pool of active consumers to 11.2 million for a whopping 150% year-over-year gain.

Max Levchin, founder and CEO of Affirm, reflected on his company’s outstanding quarterly performance. “Affirm’s strong growth accelerated this quarter, reflecting the key advantages of our superior technology, and commitment to putting people first,” he posited.

The Bottom Line on AFRM Stock

Okay, so maybe AFRM stock wasn’t quite ready to hold $170 last year. Sometimes, the buyers just get ahead of themselves. Today, however, the share price may be too depressed and ripe for a rebound. A 2x or even a 3x move might be in store.

So, feel free to check out Affirm’s financial stats and its new products and services. You should be impressed — and perhaps even persuaded to buy a few shares of AFRM stock.

On the date of publication, David Moadel 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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/payment-networks-growth-isnt-reflected-yet-in-afrm-stock/.

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