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Why Affirm Stock Jumped 15% Today

By Rich Smith – Oct 6, 2021 at 1:37PM

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Amazon, Walmart, and now Target have partnered with Affirm.

What happened

Over the past few months, buy now, pay later specialist Affirm Holdings (AFRM -2.41%) has struck up partnerships with Amazon, with Shopify, and with Walmart. I suppose it was only a matter of time before Target (TGT -1.25%), too, would jump on the BNPL bandwagon.

And now it has. And Affirm stock is up 14.8% as of 1:11 p.m. EDT.

Arrow angles up on a green stock chart.

Image source: Getty Images.

So what

USA Today broke this story, reporting today that Target has inked partnerships with Affirm and with Australian BNPL company Sezzle to help its customers "take advantage of our best deals."  

Customers making small dollar value purchases will be able to use Sezzle to make payments over time with no interest or fees. Affirm will be offered as an option for customers spending more than $100 on a purchase at Target.

Now what

Now investors just need to see if all this retail enthusiasm for BNPL will translate into greater sales for the retailers that are partnering with Affirm to offer it.

Over and above the news itself, I think perhaps the most important bits of today's USA Today story (for investors) are the paper's observations that "interest in store credit cards plunged in 2021" and "consumers were still slightly more likely to use store credit cards for holiday shopping than the buy now, pay later installment plans."

That doesn't sound particularly propitious for Affirm's growth prospects -- its product is less popular than something else in which interest "plunged." On the other hand, the newspaper also found that "consumers who use buy now, pay later tend to be younger and some don't qualify for credit cards." Ultimately, therefore, the success of BNPL at Target, and at Walmart, Amazon, and Shopify, could depend on just how big that segment of customers who don't qualify for credit cards turns out to be.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. 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
$11.34 (-2.41%) $0.28
Walmart Stock Quote
Walmart
WMT
$145.31 (-2.33%) $-3.47
Target Stock Quote
Target
TGT
$152.28 (-1.25%) $-1.93
Amazon.com Stock Quote
Amazon.com
AMZN
$89.09 (-1.40%) $-1.26
Shopify Stock Quote
Shopify
SHOP
$38.38 (-0.67%) $0.26

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

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