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Why Shopify Stock Soared Today

By Joe Tenebruso - May 13, 2022 at 6:47PM

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A blockbuster partnership could help to turbocharge the e-commerce leader's growth.

What happened

Shares of Shopify (SHOP -3.14%) jumped 13.6% on Friday after the online retail platform extended its collaboration with buy now, pay later (BNPL) services provider Affirm (AFRM 0.20%)

So what

The multi-year deal keeps Affirm as Shopify's exclusive BNPL partner in the U.S. Affirm will power Shopify's Shop Pay Installments service, which has proved popular with online business owners and consumers alike.

As part of the deal, Affirm will make its Adaptive Checkout product available to Shopify's merchants. The technology presents biweekly and monthly payment options in a streamlined checkout process. The new system will make it possible for shoppers to use Shop Pay for purchases ranging from $50 to $17,500, with payment terms of up to 12 months.

"Last year, we chose to partner with Affirm in the U.S. due to their technology and expertise in buy now, pay later solutions, and their commitment to transparency and never charging late or hidden fees," Shopify executive Shruti Patel said in a press release. "As we extend our partnership with Affirm in the U.S., we look forward to helping our merchants deliver even more flexibility and choice to their buyers."

People are smiling while making an online purchase.

Image source: Getty Images.

Now what 

Merchants love Shopify's installment payment service because it's been shown to boost sales by increasing checkout conversion rates. Shoppers love it because it allows them to spread out payments over time, often interest-free.

By adding value to both e-commerce businesses and their customers, Shopify hopes that its deal with Affirm will help to fuel its growth. Judging by its stock's performance today, investors think it will do just that.

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Stocks Mentioned

Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$348.66 (-3.14%) $-11.29
Affirm Holdings, Inc. Stock Quote
Affirm Holdings, Inc.
AFRM
$23.00 (0.20%) $0.05

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

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