Affirm Holdings, Inc. (AFRM), a leading player in the buy now, pay later (BNPL) sector, is experiencing a surge in stock price following a strong fourth-quarter performance. CEO Max Levchin, during an interview on Thursday, expressed confidence in the company’s ability to outperform rivals such as Klarna Bank AB, citing current consumer shopping trends as a key driver.
Affirm’s stock climbed close to 6% on Friday after the company reported impressive fourth-quarter results. Revenue grew by 47.8% to $659 million, exceeding analyst expectations. The company also narrowed its net loss to $45 million, a significant improvement from $206 million a year ago. Affirm projects to achieve profitability by the fiscal fourth quarter of 2025.
The company’s growth trajectory appears strong, with revenue increasing by 49% in the first half of 2024. This outpaces the 27% growth rate reported by Klarna, another prominent BNPL provider. Klarna recently reported a breakeven second-quarter result on a net income basis.
Despite facing regulatory scrutiny, BNPL companies are currently operating under a grace period that allows them to focus on resolving customer disputes, processing refunds, and providing clear billing statements.
JPMorgan analyst Reginald Smith, prior to Affirm’s fourth-quarter announcement, highlighted the company as a top fintech pick, citing its potential for multi-year volume and revenue growth, alongside margin expansion opportunities.
The global BNPL market is expected to experience significant growth in the coming years, projected to reach $37.19 billion in 2024 and $167.58 billion by 2032, representing a CAGR of 20.7%. This positive outlook further reinforces Affirm’s strong position in the market.
Affirm Holdings stock has seen impressive gains in the past year, rising 108% in the last 12 months. This upward trend reflects investor confidence in the company’s future prospects.
Analysts are employing various methods to predict the future trajectory of Affirm’s stock price. While earnings growth and fundamental analysis are common tools, technical analysis is also utilized to form predictive models. Some investors look for trends, such as a stock’s movement in relation to its moving average, as indicators of potential future performance.
For example, Affirm’s 200-day moving average is currently at $34.79, below its current price of $43.64. Many traders believe that a stock trading above its moving average is a bullish signal, indicating a positive trend. Trend lines can be used to extrapolate this trend into the future, providing insights into potential price levels.
Traders generally consider a stock trading above its moving average to be a bullish indicator, while a move below is often viewed as a negative signal. Trend lines can help investors make educated guesses about future stock prices under stable market conditions.
On Friday, AFRM stock closed at $44.39, representing a 6.55% increase for the day. The company’s strong performance and positive outlook are fueling investor enthusiasm and driving stock growth.
