Affirm Stock Bottomed After March Quarter Numbers


  • Affirm Holdings’ (AFRM) stock quarterly numbers justified my faith in the stock
  • The company is still small and the economic waters still perilous
  • Speculate if you believe economic conditions will improve
Affirm (AFRM) logo displayed on a smartphone
Source: Piotr Swat /

I called the turn on Affirm Holdings (NASDAQ:AFRM) stock  in early April. As is my habit, I did it early.

It’s a costly habit. Since I wrote my story shares are down 50%. They were down 70% until the company’s results justified my call. The Buy Now, Pay Later company still lost money, $54.7 million, but this was much less than expected. Revenue of $355 million meant its 50% growth rate was maintained.

A year earlier, when the stock was flying high, AFRM stock lost $287 million on revenue of $231 million. Not everything about a stock’s behavior can be explained by its financials.

AFRM Affirm $25.04

Why Buy Affirm?

Affirm shares opened for trade May 17 at about $23.74. That’s a market capitalization of $7.1 billion on what management says will be fiscal year revenue of $1.33 billion. Six months ago, those ratios would have screamed buy. Now, with so many good stocks having fallen on hard times, they tell many to sell.

But Affirm stock isn’t for everyone. I didn’t recommend it for 10-year investors last month. That’s because, ultimately, Affirm is a banking play, much like every other fintech. Its unique structure, offering low rate loans as small as a few hundred dollars, on as little as a few months, can be copied. Mastercard (NYSE:MA) and Visa (NYSE:V) are in the process of copying it.

One way around that is to unite with a processor. Affirm has done this through an agreement with Fiserv (NASDAQ:FISV). Fiserv is a merchant processor, handling MasterCard and Visa transactions. Fiserv hopes this can help it sign up more merchants who want the growth of BNPL without the hassle. Affirm, in turn, gets its software wedded to payment infrastructure, which the big boys have resisted by creating their own versions.

Affirm is a stock you are buying for capital gains. Its most recent quarterly report put some of the growth fears to rest and showed the way toward a small profit. In terms of all the industries it’s playing with — payments, banking, financial technology — it’s a minnow. But for investors, that’s an advantage. Growing from $1 billion in revenue to $2 billion offers a bigger return than growing from $20 billion to $21 billion.

Why Avoid Affirm?

If you’re still worried about the economy, you don’t want to touch Affirm stock.

Inflation means money costs money, and capital may prove unaffordable. The resulting economic squeeze could mean more unpaid loans and, ultimately, a buy-out of Affirm for less than you paid.

That was the risk in taking my April advice. When Affirm stock was at $30, I said buy it because earnings should be OK. They were, but the bigger economic picture had sent it to $15. At $23, it could prove tasty to a Bank of America (NYSE:BAC), which might grab it at $30. You will have broken even and taken a lot of agony for nothing.

Analysts have backed off their support, with 2 of 14 at Tipranks now telling investors to sell and, for most of them, take a loss. There are still 7 buyers and 5 left like deer in the headlights, wondering what to think.

The Bottom Line

If we have hit the bottom on the stock market, as I think we have, Affirm stock should keep rising, as it did after earnings. 

If current prices are a shelf and we’re heading lower, it’s best to keep your cash handy for the Jubilation Day.

The problem is, as anyone can tell you, no one knows when that Jubilation Day will come. No one can call a bottom anymore than they can call a top. That’s why I recommend you look out 3 years-5 years on your investments, buying good companies that will get across the valley of fear. From here, I think Affirm will be one of them.

On the date of publication, Dana Blankenhorn held a long position in BAC. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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