One of the bigger head-scratchers in today’s market is Affirm (NASDAQ:AFRM). Shares of AFRM stock slid more than 14% in the afternoon session on heavy volume.
This move comes on yesterday’s news that the company will be partnering with private payments company Stripe on enhancing its buy now, pay later (BNPL) business. For many, this news looks like a positive for Affirm, as the company looks to grow its ecosystem.
Yesterday, that’s how the market viewed this news. However, today, it appears the market has had time to sleep on this catalyst. A 14% drop in a given day, albeit on a red day in the markets, is significant. Accordingly, investors appear to be rethinking how the growth landscape may look from here.
Let’s dive into what investors are watching right now with Affirm.
AFRM Stock Plunges Despite a Positive Catalyst
What a difference a day can make.
Investors appear to be taking the news of an Affirm-Stripe partnership as an indication that the road forward for growth may be much bumpier than expected. Some of this view is due to macro factors that are not in Affirm’s favor. Consumers are increasingly stretching their wallets due to rising costs across the board. On the one hand, this improves the need for Affirm’s services. On the other, credit quality could be deteriorating in this environment.
Thus, the fact that Affirm has sought out a partner like Stripe suggests to many that those recessionary fears that were on the fringes not long ago may be warranted. Indeed, this is the sort of view that can really impact investor projections for Affirm’s long-term growth.
While Affirm has recently reported solid numbers, questions remain about how rosy the future will be. Today, that uncertainty has ratcheted up, making AFRM stock a difficult one to decipher right now.
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.