Leading buy now, pay later company Affirm Holdings (AFRM +1.08%) has certainly been on a hot streak, with shares up more than 55% over the past three months. In this Fool Live video clip, recorded on Sept. 13, Fool.com contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss why Affirm's recent news has investors so excited.
Jason Moser: Matt, last week, Affirm reported earnings for the quarter, and that was on top of a very positive headline of a relationship they just developed with Amazon (AMZN 0.87%). But all in all, Affirm shareholders have got to be feeling really good about where the company is going right now. A lot of positive news out there. And the results from the most recent quarter certainly support that.
Wondering: When you look through that most recent report there -- and we talked about Affirm a lot here, the buy now, pay later space -- it seems like they are starting to do what you and I think we were a little bit concerned with this business, and we were concerned about that customer concentration. It seems like that customer concentration risk is starting to dissipate a little bit.
Matt Frankel: I love that you and I read the earnings report and come up with the exact same takeaway. It's pretty great. You're right, the biggest negative I mentioned when we talked about Affirm back in its IPO day was that it's very levered to Peloton (PTON 1.46%), its No. 1 customer. Peloton, if you're not familiar, was using Affirm to let people finance those $3,000 workout bikes over I think three years interest-free or something to that effect.
Their sales or their gross merchandise volume, their GMV, was up 106% year over year. Excluding Peloton, the non-Peloton portion of their business, it was up 178% year over year. That part of the business is growing faster, which is really welcome news, and that's not including any impact from the Amazon relationship that we talked about. It's really welcome news because it just couldn't have come at a better time. Peloton's dropping the prices on its bikes, it's seeing sales start to slow down from the pandemic boost. If you remember, there were times last year when you couldn't get a Peloton bike.
Moser: Yeah.
Frankel: I don't know if they're still on a backlog, but for a while, it was months from the time you ordered till the time the bike arrived, just because they were so backed up, and that's not the case anymore. It looks like they're growing the business in the right way. They brought Shopify (SHOP 2.63%) merchants onto their platform, that was a big deal. The active merchants on Affirm's platform is now at 29,000, that's five times from a year ago. And the big reason is because in June, they opened their platform up to all Shopify merchants who qualify. That's a big, big plus, that they're getting away from just Peloton, and Amazon will help them diversify even more.
