Shares of digital payments specialist Affirm (NASDAQ:AFRM) are soaring on Tuesday following a major announcement. Specifically, Walmart (NYSE:WMT) will implement Affirm’s buy now, pay later (BNPL) services at its self-checkout kiosks across its U.S. stores, which cover more than 4,500 locations. While AFRM stock is popping higher on this catalyst, it may also be rising on the expanded demographic implications.
According to a press release, eligible shoppers using the BNPL platform will be able to easily pay for their favorite items in “simple monthly payments” when using a self-checkout in-store.
Per Affirm Senior Vice President of Revenue Pat Suh, the company’s research revealed that more than half of Americans look for retailers to offer BNPL options at checkout. What’s more, the company has apparently discovered that “76% of consumers would either delay or not make a purchase without Affirm.” Therefore, Affirm expanding its partnership with Walmart holistically boosts consumer demand and represents a win-win. According to Reuters, Affirm first partnered with Walmart in 2019.
Adding to the enthusiasm for AFRM stock, customers opting to use BNPL platforms “soared to 42.5% on Cyber Monday” from one year prior. Data from Adobe Analytics revealed that shopping worth $940 million utilized BNPL.
AFRM Stock Rises on Positive Demographic Trend
Naturally, part of the main catalyst for AFRM stock today is the fact that Walmart is the biggest retailer in the world by revenue. With the company posting sales of $611.3 billion for the fiscal year ended January 2023, it may be a while before other retailers catch up. That’s point number one.
That said, there are also immensely positive demographic implications undergirding AFRM stock. Fundamentally, according to a June 2021 article from Insider Intelligence, almost 75% of BNPL users in the U.S. are either Gen Z or millennials. This statistic also makes intuitive sense. After all, younger consumers — particularly Gen Z — have grown up in the digital age.
As Insider Intelligence points out, Gen Z digital buyers have been adopting BNPL services at a faster pace than their millennial counterparts. This makes sense as well, as several alternative payment providers have “long-standing partnerships” with retailers like Forever 21 and H&M (OTCMKTS:HNNMY) — establishments catering to younger customers.
Still, older customers have also been steadily adopting BNPL platforms, which presents a huge opportunity for Affirm and AFRM stock. And, one can assume, Gen X and baby boomers will likely gravitate toward the more traditional brands with which they are familiar.
In terms of brand awareness, it doesn’t get much more familiar than Walmart.
Why It Matters
While excitement has been brewing for AFRM stock, analysts remain skeptical, giving the shares a consensus hold rating. This assessment breaks down as three buys, eight holds and five sells. Additionally, the average price target for AFRM sits at $25.66, implying almost 50% downside risk.
On the date of publication, Josh Enomoto did not hold (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.
