Ticker symbol: AFRM
Affirm are surging by 25% in postmarket trading as the company posted robust numbers in its earnings report published after market close. The company’s shares reached a zenith, along with much of the market, in November 2021, when shares closed at an all-time high of $168.52. Since then, shares have fallen almost 92% to a May 11th low of $14.63.
The company was one of the major pandemic beneficiaries from the relatively new service of online buy-now-pay-later. Shares fell after the previous quarter’s poor report and the general pull-back in valuations for high flying fin-tech companies.
The company reported third quarter results that beat both on the top and bottom lines. Adjusted loss per share of 19 cents was well ahead of the estimated loss of $1.06/share. Revenue came in at $354.8 million, up 54% year over year, and ahead of Wall Street’s expectation of $344.3 million.
Critically, gross merchandise volume also beat analysts estimates, coming in at $3.9 billion versus $3.86 billion. Affirm’s management also said the company should be able to achieve sustained profitability on a run-rate, adjusted operating income basis by July 2023, well ahead of expectations.
Additionally, the company issued strong guidance for the fourth quarter. It sees revenue of $345 to $355 million against an estimate of $353.1 million and gross merchandise volume of $3.95 to $4.05 billion versus an estimate of $3.95 billion. For the full fiscal year, management guided towards revenue of $1.33 to $1.34 billion, when it previously saw revenue of $1.31 billion and analysts modelled $1.33 billion. Gross merchandise value is now expected to average $15.09 billion. The company previously guided towards a GMV of $14.78 billion and analysts expected $15 billion.
The company also announced that it had secured a multiyear extension of its partnership in the U.S. with the e-commerce giant Shopify. The partnership cements Affirm as the exclusive buy-now-pay-later provider to Shop Pay Installments service in the domestic market. Affirm also has a partnership with the largest e-commerce company in the U.S., Amazon. Affirm’s market value has fallen to roughly $5 billion after the strong correction in the past six months.
SEC scrutiny on buy-now-pay-later firms has also served to deteriorate investor sentiment on the sector as a whole. Given its current valuation and solid results, however, we can see Affirm shares consolidating around the $25 share price before moving higher in the second half of the year.
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