Today's video focuses on Affirm's (AFRM +1.18%) recent earnings, which were announced on Sept. 9 after the market closed. Investors were very bullish after the report as the stock price jumped over 20%. I review the earnings data in the video, but more importantly, I mention a few yellow flags investors should know. Yellow flags are not a reason to sell but just things to consider as an investor. Here are some highlights from the video.
- Affirm reported solid year-over-year revenue growth, but the most significant bullish case for investors is the guidance for the fiscal year 2022. Affirm guides for revenue of $1.16 billion to $1.19 billion, in line with analysts' expectations. Still, more importantly, the guidance does not consider revenue from its recent partnership with Amazon, which has investors excited about more substantial growth in the upcoming quarters.
- The first yellow flag is that Affirm has numerous competitors. A prime example would be PayPal and its recent acquisition of a Japanese buy now, pay later company, which expands its market in Asia. Investors may argue that Affirm, with its recent partnership with Shopify and Amazon, has shown to be a strong business.
- The second yellow flag is current valuations. In the video, I take a closer look at Affirm's forward price-to-sales valuations. The valuation seems to be a bit high, but the market can continue to seem high for high-growth stocks like Affirm.
Click the video below for my full thoughts and analysis.
*Stock prices used were the pre-market prices of Sept. 9, 2021. The video was published on Sept. 9, 2021.
