Please ensure Javascript is enabled for purposes of website accessibility

Why Affirm Stock Soared 34% Today

By Joe Tenebruso – Sep 10, 2021 at 4:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Demand for "buy now, pay later" services is booming.

What happened

Shares of Affirm Holdings (AFRM 1.46%) rocketed 34.4% on Friday after the payment network's fiscal 2021 fourth-quarter growth metrics dazzled investors. 

So what

Affirm's revenue surged 71% year over year to $261.8 million. The gains were fueled by a 106% rise in gross merchandise volume (GMV) -- the total dollar amount of all transactions conducted on Affirm's platform, net of refunds -- to $2.5 billion.

A finger is pressing a keyboard button labeled buy now.

Affirm's flexible payment options are proving popular with shoppers. Image source: Getty Images.

Both businesses and consumers are flocking to Affirm's network. Active merchants soared 412% to nearly 29,000, driven in part by Affirm's partnership with e-commerce leader Shopify.

Meanwhile, active consumers jumped 97% to 7.1 million. People are also using Affirm's services more often, with transactions per active consumer rising 8%, to roughly 2.3.

Now what

Investors were no doubt pleased by Affirm's upbeat forecast for the year ahead. Management expects Affirm's revenue to grow by roughly 35% to $1.2 billion in fiscal 2022, driven by a 52% increase in GMV, to $12.6 billion.

Better still, these figures are likely to prove conservative, as they don't include any benefit from Affirm's partnership with online retail-titan Amazon.com. The two companies plan to bring Affirm's "buy now, pay later" services to Amazon's customers in the coming months.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso owns shares of Amazon and has the following options: long January 2023 $2,400 calls on Amazon. The Motley Fool owns shares of and recommends Affirm Holdings, Inc., Amazon, and Shopify. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $1,140 calls on Shopify, short January 2022 $1,940 calls on Amazon, and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

Stocks Mentioned

Affirm Stock Quote
Affirm
AFRM
$14.62 (1.46%) $0.21

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

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.