Affirm Holdings (AFRM) is one of the hottest stocks on Friday after the buy now, pay later (BNPL) company reported a surprise profit and revenue beat for its fiscal 2025 second quarter.
In the three months ending December 31, Affirm's revenue increased 46.6% year over year to $866 million. It also swung to a net profit of 23 cents per share from a loss of 54 cents per share in the year-ago period.
"Contributing to this strong performance was another record-setting holiday shopping season as we once again delivered for our merchants, with several standout categories: during Black Friday/Cyber Monday, third-party marketplaces grew 44%, and travel 42%," said Affirm CEO Max Levchin in a statement.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results topped analysts' expectations. Wall Street was anticipating revenue of $807 million and a net loss of 15 cents per share, according to CNBC.
Affirm also said its gross merchandise volume (GMV) grew 34.7% year over year to $10.1 billion, topping analysts' expectations of $9.6 billion.
For its fiscal third quarter, Affirm said it expects to achieve revenue in the range of $755 million to $785 million. The midpoint of this range, $770 million, came up just short of the $772 million in revenue Wall Street is anticipating.
Affirm also provided a more detailed forecast for its full-year guidance. The company is calling for GMV in the range of $34.74 billion to $35.34 billion and revenue of $3.13 billion to $3.19 billion. This compares to its previous forecast for GMV of more than $34 billion and revenue that is at least 20 basis points higher than in 2024. (A basis point = 0.01%.)
"Affirm is in the strongest shape it's ever been," Levchin said. "Challenges met, competitors bested: excellent growth in a rapidly-expanding segment, on-target unit economics, robust operating leverage."
Is Affirm stock a buy, sell or hold?
Heading into Friday's session, Affirm Holdings was up more than 42% year over year, outpacing the S&P 500's total return (price change plus dividends) of 24.5%. Unsurprisingly, Wall Street is mostly bullish on the financial stock.
According to S&P Global Market Intelligence, the average analyst target price for AFRM stock is $70.79, representing implied upside of about 15% to its February 6 close. Additionally, the consensus recommendation is a Buy.
However, there are still a few holdouts to be found. Financial services firm Susquehanna, for one, has a Neutral rating (equivalent to a Hold) on the large-cap stock but raised its price target to $65 from $57 following the earnings release.
"AFRM results came in well ahead due to a variety of factors including unique partnerships, broad and growing adoption of their card, and increased popularity of their 0% APR product that rose 70%, all of which seemingly drove increased market share,” says Susquehanna analyst James Friedman.
Friedman adds that going forward, Affirm will see a variety of new growth thanks to "broadening merchant acceptance, a high-velocity funnel of new consumer accounts coming on file, and an attractive credit market.”
However, the share price has rallied too far, too fast, in Friedman's opinion and his Neutral rating is based on valuation.
Related Content
-
USPS Is Raising Prices for Holiday Shipping: Dates and Increases You Need to KnowWhat the USPS's $16 price hike means for your wallet and your small business.
-
July CPI Report Ignites a Risk-On Rally: Stock Market TodayMarket participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
July CPI Report Ignites a Risk-On Rally: Stock Market Today
Market participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
July CPI Report Boosts Rate-Cut Odds: What the Experts SayThe July CPI report shows that tariffs are having a slight impact on inflation, though not enough to keep the Fed from cutting interest rates.
-
DST Exit Strategies: An Expert Guide to What Happens When the Trust SellsUnderstanding the endgame: How Delaware statutory trust dispositions work, what investors can expect and why the exit is probably more important than the entrance.
-
Think Selling Your Home 'As Is' Means You'll Have No Worries? Think AgainThere are significant risks and legal obligations involved in selling a home 'as is' and by yourself, without a real estate agent.
-
Stocks Slip Ahead of July CPI Report: Stock Market TodayThe latest inflation updates roll in this week and Wall Street is watching to see how much of an impact tariffs are having on cost pressures.
-
What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's GuideFor Americans in lower- and middle-income tax brackets, the enhanced deduction for older people reduces taxable income, shielding most of their Social Security benefits from being taxed.
-
Financial Planner vs Investment Manager: Who's the Better Value for You?When markets are shaky, who do you trust with your money? A recent study provides useful insights into the value that different financial professionals offer.
-
I'm a Financial Adviser: This Is How You Could Be Leaving Six Figures in Social Security on the TableClaiming Social Security is about more than filing paperwork and expecting a check. When you do it and how you do it have huge financial implications that last the rest of your life.
