Will Affirm Stock Reach $100?
|Current Market Cap||$6 B||Higher|
|Trading Volume||$12.1 M||Lower|
Affirm Holdings, Inc. is a financial technology company that offers a platform for digital and mobile-first commerce. It comprises a point-of-sale payment solution for consumers, merchant commerce solutions, and a consumer-focused app.
Affirm Holdings Last Quarter Result
- Revenue also outperformed the forecast, coming in at $381 million compared to the expected $360-$380 million.
- Revenue Less Transaction Costs (RLTC) was $167 million, exceeding the projected $140-$150 million.
- The Gross Merchandise Volume exceeded expectations at $4.6 billion, surpassing the outlook of $4.4-$4.5 billion. The quarter saw strong consumer demand, especially in the travel and ticketing sectors, which grew by 62% year-over-year. Partnerships with Booking.com and Royal Caribbean were extended, a major airline was signed, and the first auto rental agency was added.
- Active consumers grew to 16 million, a 26% growth. The growth in transactions per active user was at 34%, leading to 3.6 transactions per user. There were 14.3 million transactions in FQ3’23, representing a 36% growth.
- Credit performance improved again, with delinquencies after 30 days (excluding Peloton and Pay in 4) dropping to 2.5%.
- March ended with $11.4 billion in Funding Capacity, and an additional $400 million was added through the expansion of the 2023-A ABS offering in April.
- Over 100 projects were launched by the credit modeling, product, engineering, and pricing teams, which led to significant wins in underwriting, profitability, and growth.
At the current price, Affirm stock will have to rise around 6 times to reach $100.
Will Affirm Stock Reach $100? Factors in Favor
- Big Partners: Affirm Holdings Inc can be at the doorstep of accelerated growth. Its partnerships with Amazon, Shopify, Target, and Walmart can take it to another level of growth trajectory in the next five years. Affirm could be an alternative to payment solutions. It signals that there is a very good opportunity to disrupt the traditional credit card market.
- Number of Consumers and Merchants soared: Affirm has surpassed analysts’ estimates on growth figures. Reportedly, merchants on Affirm platform increased 64% from the previous quarter.
- Attractive Valuation: As Affirm Holdings Inc shares have tanked from the mid-70s to 30s recently and are down 70% from their high of $174, it trades at a forward price-to-sales ratio of below 10. The valuation seems reasonable even after considering all the likely hiccups in the near future.
- Future growth possibility– According to research from Grand View, BNPL markets can expand at a compound growth rate of 22.4% from 2021 to 2028 and that shows that it is just starting for companies like Affirm. Even if Affirm sticks to its growth rate, revenue can increase four times from $870.5 million in fiscal 2021 to $3.6 billion in 2028. When the economics of scale kicks in, profitability is expected to improve.
Will Affirm Stock Reach $100? Factors Against
- Fierce Competition– Affirm Holdings Inc is not the only player in the BNPL space. PayPal (Nasdaq: PYPL) launched its BNPL services back in 2020. Block, Afterpay, and Klarna are other companies in this space. Also, PayPal and Block have the capacity to reduce the rates to attract customers and merchants and that can eat further in both sales and margins of Affirm
- Fear of Interest rate hike: Since the fag end of November, there is a perpetual fear of interest rate hikes from the Fed on account of the rising inflation. But what it means for Affirm is that they will have to increase their interest rates to keep up with the market. Also, Affirm may need to increase their fees to narrow their losses which in turn may make their proposition less attractive.
- Subprime borrowers – BNPL as a concept is meant for subprime microloans for lower-income consumers, and many among them do not have a credit score required for traditional credit cards. Betting on these consumers in a rising inflation scenario increases the risk. Also, a recent survey found that 34% of BNPL users have defaulted on at least one of their payments. Affirm also needs to tighten its provisions on credit losses which have increased from 17% to 24% between the first quarters of 2021 and 2022.
Will Affirm Stock Reach $100? Calculation
We use a calculation assuming, Affirm stock increases, 10% or 20% a year from here on to check in these scenarios when could Affirm stock reach $100:
- Assuming Affirm stock gains 10% a year from now, then in the next 22 years, that is in 2047 Affirm will be valued at $100.
- If there is an average increase of 30% a year from now, it will take 8 years that is in 2032, Affirm will reach $100.
Conclusion: Will Affirm Stock Reach $100?
The Buy-now-Pay-later pioneer, Affirm’s stock has crashed massively in the last 1 year. In November 2021, Affirm was trading at over $160, and now Affirm is below $20.
However, despite the crash, Affirm has showcased its capability to rise higher. Therefore, Affirm stock could reach $100 again in the coming future.
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.