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AFRM Stock Climbs 30% After Affirm Beat Q3 Revenue Estimates


Affirm (NASDAQ:AFRM) stock is up nearly 30% today after the financial technology (fintech) company beat fiscal third-quarter revenue estimates and expanded its partnership with e-commerce company Shopify (NYSE:SHOP).

Smartphone with website of US financial technology company Affirm Holdings Inc (AFRM) on screen with logo Focus on top-left of phone display
Source: Wirestock Creators / Shutterstock.com

Today’s move sharply higher comes as welcome relief to Affirm shareholders. Before today’s move to the upside, AFRM stock had fallen 80%.

The San Francisco-based online lender has struggled as investors rotate out of high-growth, unprofitable technology stocks and into more stable securities that are better able to withstand the impact of rising interest rates.

What Happened With AFRM Stock

In announcing its financial results, Affirm raised its annual revenue forecast and said it has extended a partnership with Shopify in the U.S. The buy now, pay later firm’s fiscal third-quarter revenue surged 54%, surpassing Wall Street estimates. The company attributed this to higher-interest income and loan volumes.

Affirm also said that the number of active merchants on its platform grew to 207,000 in the first three months of this year from just 12,000 in the year-earlier period. The number of active consumers increased 137% to 12.7 million.

Additionally, Affirm raised its full-year revenue forecast to between $1.33 billion and $1.34 billion, up from $1.29 billion to $1.31 billion previously.

Why It Matters

Affirm’s financial results come as a surprise to both analysts and investors, who clearly expected a deteriorating situation at the fintech company. Its results also stand in sharp contrast to rival fintech firm Upstart Holdings (NASDAQ:UPST), which lowered its annual revenue outlook earlier this week due to declining loan demand. UPST stock has fallen 63% in the past five trading sessions alone, bringing its year-to-date loss to 77%.

The extension of its existing deal with Shopify is also seen as beneficial to both companies and should help Affirm to continue growing the number of active users on its platform.

What’s Next for Affirm

Affirm’s prospects suddenly look a lot brighter following its latest earnings print and forward guidance. The company appears to be on a strong growth path and heading toward profitability. If it can maintain its current trajectory, AFRM shareholders should continue to be rewarded.

On the date of publication, Joel Baglole 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.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

Article printed from InvestorPlace Media, https://investorplace.com/2022/05/afrm-stock-climbs-30-after-affirm-beat-q3-revenue-estimates/.

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