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Why Affirm Stock Lost 22% in November

By Jennifer Saibil – Dec 6, 2021 at 5:52PM

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The fintech stock is facing market volatility.

What happened

Buy-now, pay-later company Affirm Holdings (AFRM -7.34%) lost 22% of its value in November, according to data from S&P Global Market Intelligence. The decline in the stock price was part of a broader drop across the fintech industry, as inflation took hold and fear of the omicron variant sent stock prices down.

So what

On Nov. 10, Affirm posted excellent results for the first fiscal quarter, ended Sept. 30. Revenue and gross merchandise volume (GMV) growth exceeded expectations, increasing 55% and 84% year over year, respectively. GMV excluding its largest customer, Peloton Interactive, increased 134%. Management raised its fiscal outlook as a result of the high increases.

A man holding a credit card in one hand and a mobile phone in the other sitting in front of a computer.

Image source: Getty Images.

The up-and-coming fintech company launched its partnership with e-commerce giant Shopify earlier this year, and that helped catapult Affirm's merchant count from 6,500 in Q1 2020 to more than 100,000 this year. Active customers increased 124% year over year to over 8 million. Affirm also announced in November that it's expanding its relationship with Amazon, which will be the retail king's exclusive buy-now, pay-later partner through January 2023.

On the other side, earnings per share in the first quarter came in below analyst expectations, at a loss per share of $1.13. Wall Street's average consensus was $0.30.

In all, it was a solid report, with much to be excited about for the small but growing company. But economic headwinds caused high volatility in the stock market, specifically for fintech companies, which can be directly affected by government policies and economic trends.

Now what

Affirm wasn't a great performer at first after its initial public offering in January, but it had since exploded on its solid performance and strong partnerships. However, after the recent downward movement, Affirm stock is up only 9% year to date. 

There isn't really any news specific to Affirm that should worry investors, though. It's demonstrating growth in its core products, and it's also launching new, complementary services that make it a stronger contender in fintech. Its new partnerships are an important part of its strategy in moving away from having a too-large chunk of its business concentrated in Peloton, and at an opportune time, as Peloton's growth looks to be receding. Affirm might prove to be a great growth story.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Affirm Holdings, Amazon, Peloton Interactive, 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.

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