Affirm Nears Profitability and Wall Street Is Cheering
Affirm stock is rallying Thursday after the BNPL firm reported strong results and said it expects to turn a profit by the end of this fiscal year.
Affirm Holdings (AFRM) stock is up by more than 30% at last check in Thursday's session after the leading buy now, pay later (BNPL) company beat top- and bottom-line expectations for its fiscal fourth quarter and issued a strong outlook for the quarter ahead.
In the three months ended June 30, Affirm's revenue increased 48% year-over-year to $659.2 million, driven by gross merchandise volume (GMV) growth of 31% to $7.2 billion. The company said its net loss per share narrowed to 14 cents from 69 cents in the year-ago period.
"We delivered excellent results in both the fourth fiscal quarter as well as full 2024 fiscal year," said Affirm CEO Max Levchin in a statement. "We grew GMV at a rate exceeding 30% and revenue at a rate exceeding 45% – in both the quarter and the fiscal year."
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Affirm's results topped analysts' expectations. Wall Street was anticipating revenue of $604 million and a net loss of 51 cents per share, according to CNBC.
For the first quarter of fiscal 2025, Affirm said it anticipates revenue in the range of $640 million to $670 million, well ahead of analysts’ expectations of $625 million.
“By the end of this calendar year, we expect that Affirm will be natively integrated into four of the top digital wallets in North America," Levchin said. "Yet, with GMV barely over 2% of U.S. and Canadian e-commerce, we've only just scratched the surface of our opportunity.”
Levchin also announced a new goal of achieving profitability on a GAAP basis by the fourth quarter of fiscal 2025 and maintaining GAAP profitability from that point forward.
Is Affirm stock a buy, sell or hold?
Heading into today's session, Affirm was down nearly 36% for the year to date. Unsurprisingly, Wall Street has been on the sidelines when it comes to the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for AFRM stock is $36.97, representing a discount of more than 10% to current levels. Meanwhile, the consensus recommendation is Hold.
Financial services firm Wedbush is one of the more bearish outfits on AFRM stock with an Underperform rating (equivalent to a Sell) and a $20 price target.
"Affirm reported a solid quarter and provided a better than expected guide for fiscal 2025, which included anticipated GAAP profitability by the end of fiscal 2025,” said Wedbush analyst David Chiaverini said in a note this morning. "While results this quarter were solid and the outlook better than expected, we maintain our Underperform rating as we believe consumer lenders such as Affirm should be valued more in line with other consumer finance balance sheet lenders."
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