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Up 70% This Month! Is Affirm Still a Buy Right Now?

By Neil Rozenbaum – Sep 14, 2021 at 11:15AM

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Great earnings combined with some partnership announcements have pushed Affirm stock to the moon.

In this video, I will be talking about the very hot buy-now-pay-later stock Affirm (AFRM 1.46%). The recent partnerships with Apple and Amazon and great quarterly earnings have made the stock go up over 80% since its August lows. You can find the video below.

A different BNPL

Affirm enables customers to buy now and pay later but requires them to pay interest. Unlike Afterpay, which Square recently acquired for $30 billion, Affirm does a credit check and offers financing from 0% to 30%. Since it charges interest, it doesn't charge late fees. This means that what you see at checkout is exactly what you're going to be paying.

For merchants, it's a plus to offer these types of services because they may attract more customers and increase total order values. Shoppers may like having another payment option. The BNPL market is still in its early innings, but there are already some big players competing for the same pie. These names include Klarna, PayPal, and Afterpay.

Buy-now-pay-later companies might cause credit card companies some trouble in the future because of their positioning in the buying and selling cycle. 

Accelerating growth

Affirm's Q4 revenue grew 71% year over year to $261.8 million, fueled by a 106% rise in gross merchandise volume (GMV), which totaled $2.5 billion. Active merchants soared 412% to nearly 29,000, driven by Affirm's partnership with Shopify.

Meanwhile, active consumers grew 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. Management expects Affirm's revenue to grow by roughly 35% to approximately $1.17 billion in fiscal 2022, fueled by a 52% increase in GMV, to $12.6 billion. These estimates do not include the potential GMV increase from the recent Amazon partnership. 

Full full insights do watch the video below.

*Stock prices used were the closing prices of Sept. 10, 2021. The video was published on Sept. 14, 2021.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Rozenbaum owns shares of Amazon, Shopify, and Square. The Motley Fool owns shares of and recommends Affirm Holdings, Inc., Amazon, Apple, PayPal Holdings, Shopify, and Square. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2022 $75 calls on PayPal Holdings, long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, short January 2023 $1,160 calls on Shopify, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Affirm Stock Quote
$14.62 (1.46%) $0.21
Apple Stock Quote
$147.81 (-0.34%) $0.50 Stock Quote
$94.13 (-1.44%) $-1.37
Shopify Stock Quote
$43.06 (-0.78%) $0.34
PayPal Stock Quote
$74.66 (-4.93%) $-3.87
Block Stock Quote
$68.18 (-1.43%) $0.99

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

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