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Could Affirm Be the Next Big Acquisition Target?

By Matthew Frankel, CFP® – Aug 12, 2021 at 6:23AM

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With a major land grab in the "buy now, pay later" space, is Affirm the next big M&A deal?

We recently learned that Square (SQ -0.84%) is acquiring "buy now, pay later" (BNPL) fintech Afterpay in a $29 billion deal. This is just the latest headline in the red hot BNPL space. In this Fool Live video clip, recorded on Aug. 2, contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss whether BNPL giant Affirm Holdings (AFRM -1.73%) could be the next target.

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Matt Frankel: "Affirm stock after Square purchased Afterpay. Will someone buy Affirm also?" Affirm stock did pop today. It's looking like an acquisition target. Like you said, it has about half the valuation Square's paying for Afterpay. I don't know if somebody will end up buying out Affirm.

Jason Moser: It's hard to say because we've got companies like Mastercard (NYSE: MA) and Visa (NYSE: V) kind of building their own stuff there, PayPal (NASDAQ: PYPL) clearly already has as well.

Frankel: You know who I think should buy Affirm?

Moser: Who?

Frankel: Goldman (GS 0.68%). I think that would be a perfect fit for the Marcus ecosystem.

Moser: That's the one.

Frankel: They could definitely afford to do it.

Moser: What about JPMorgan (JPM 0.19%)? Remember the thing, what Jamie Dimon was talking about fintech and how he realizes the threat.

Frankel: JPMorgan could acquire Affirm. They might face more regulatory scrutiny just because they're a giant commercial banking operation already, but it could definitely happen. I could see a company like one of the big tech giants maybe going after Affirm if they wanted to really get into it, like Apple (AAPL -1.96%).

Moser: Yeah, easily.

Frankel: Didn't we read that Apple was going to be partnering with Goldman to develop a buy now, pay later product?

Moser: Yeah, that's right.

Frankel: Well, there you go. Goldman buys Affirm partners with Apple, then boom.

Moser: It's absolutely possible.

Frankel: With that, I will say I never recommend investing in a stock because you think it's an acquisition target.

Moser: Never.

Frankel: It's important to point that out. It could happen. Chances are it's going to be a stand-alone company for a while.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Matthew Frankel, CFP owns shares of Apple, Goldman Sachs, and Square and has the following options: short November 2021 $140 calls on Apple. The Motley Fool owns shares of and recommends Affirm Holdings, Inc., Apple, Mastercard, PayPal Holdings, Square, and Visa. The Motley Fool recommends the following options: long January 2022 $75 calls on PayPal Holdings, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Affirm Holdings, Inc. Stock Quote
Affirm Holdings, Inc.
$13.08 (-1.73%) $0.23
Goldman Sachs Stock Quote
Goldman Sachs
$388.86 (0.68%) $2.61
Apple Stock Quote
$148.11 (-1.96%) $-2.96
JPMorgan Chase Stock Quote
JPMorgan Chase
$136.74 (0.19%) $0.26
Block, Inc. Stock Quote
Block, Inc.
$63.38 (-0.84%) $0.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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