Affirm Holdings Inc., the buy now, pay later firm, experienced a significant surge in its stock price, with a 26% increase in early trading on Friday. This surge came after the company reported better-than-expected fiscal fourth-quarter results and provided optimistic guidance for the first quarter.
Here’s a breakdown of how Affirm performed:
– Loss per share: 69 cents, surpassing analysts’ expectations of 85 cents (according to Refinitiv).
– Revenue: $446 million, exceeding analysts’ expectations of $406 million (according to Refinitiv).
Additionally, Affirm provided strong guidance for the fiscal first quarter, projecting a revenue range of $430 million to $455 million, surpassing analyst expectations of $430 million.
Affirm’s gross merchandise volume (GMV) for this quarter was $5.5 billion, a 25% increase compared to the previous year. This figure also surpassed analyst expectations of $5.3 billion. GMV is a key metric used to measure the total value of transactions over a specific period.
The company reported a net loss of $206 million (or 69 cents per share), compared to a net loss of $186.4 million (or 65 cents per share) in the same quarter last year.
While Affirm and other buy now, pay later services experienced growth during the pandemic due to increased online shopping, the company has had to navigate challenges posed by a worsening economic environment and rising interest rates.
Despite these challenges, Affirm’s finance chief, Michael Linford, expressed confidence in the company’s ability to deliver strong credit results, positive unit economics, and sustained GMV growth. Linford emphasized Affirm’s profitability, even in a high interest rate environment.
Affirm acknowledged in its earnings report that the resumption of student loan payments in October will present a modest challenge to its fiscal 2024 GMV.
Analysts responded positively to Affirm’s performance, with Deutsche Bank analysts raising their price target for the stock from $12 to $16 and maintaining a hold rating. They highlighted the growth potential of the Affirm Card, the company’s debit card. As of midday Friday, Affirm was trading at over $17 per share.
In conclusion, Affirm’s strong fiscal fourth-quarter results and optimistic outlook for the first quarter have generated positive market sentiment and favorable analyst opinions. The company’s ability to navigate challenges and demonstrate growth in various economic conditions gives investors confidence in its future prospects.
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