Affirm Holdings (AFRM) Stock Jumps 21% on Stellar Q4 Performance: What Investors Need to Know
NEW YORK - Affirm Holdings Inc. (NASDAQ: AFRM), a leading buy-now-pay-later (BNPL) company, saw its shares surge over 21% following the release of its impressive fourth-quarter financial results and promising guidance for the upcoming quarter.
Key Financial Highlights
- Earnings: The fintech firm reported an adjusted loss of -$0.14 per share for the quarter ending June 30, significantly outperforming analysts' expectations of a -$0.51 per share loss.
- Revenue: Affirm's revenue climbed to $659.19 million, surpassing the consensus forecast of $603.67 million and marking a remarkable 45% year-over-year (YoY) increase.
- Gross Merchandise Volume (GMV): The company experienced robust growth in GMV and active merchants, with a 42% YoY increase in transactions to 24.7 million in Q4.
- Active Merchants: Affirm's active merchant count exceeded 300,000.
Forward-Looking Guidance
Looking ahead, Affirm provided an optimistic outlook for the first quarter of fiscal 2025. The company projects revenue between $640 million and $670 million, with the midpoint of this range surpassing the analyst consensus of $624.6 million.
Analyst Reactions
Morgan Stanley
Morgan Stanley analysts acknowledged Affirm's "impressive execution" during the quarter but expressed concerns about the stock's valuation, which they believe remains "stretched." They commented:
"AFRM will likely trade on near-term consumer sentiment expectations and estimate revisions. While AFRM is executing well, the long-term valuation frameworks offer little to no upside from current trading levels, skewing risk-reward to the downside."
Mizuho
Mizuho analysts were more optimistic, describing Affirm's performance as a "killer quarter." They highlighted that the company’s conservative guidance could convert bearish sentiments into bullish ones.
CEO's Perspective
Max Levchin, CEO of Affirm, expressed strong confidence in the company's future. He stated:
"We intend and expect to be profitable on a GAAP basis in our fourth fiscal quarter, and plan to operate the business while maintaining GAAP profitability thereafter."
Strategic Partnerships and Network Expansion
Affirm also emphasized its expanding network reach, revealing partnerships with the top three brands and commerce platforms in the U.S. by market share. Additionally, the company aims to be natively integrated into four of the top digital wallets in North America by the end of this calendar year.
Breaking It Down: What This Means for Your Finances
The Basics
- What Happened: Affirm Holdings saw its share price jump by 21% after reporting better-than-expected Q4 results and providing an optimistic outlook for the next quarter.
- Key Numbers: The company reported a much smaller loss per share than analysts had predicted and significantly higher revenue than expected.
Why It Matters
- For Investors: This strong performance and positive outlook could mean that Affirm is a good short-term investment. However, some analysts caution that the stock may be overvalued in the long term.
- For Consumers: Affirm's growth and partnerships mean more BNPL options at major retailers, potentially making it easier for you to manage your purchases.
What to Watch
- Valuation Concerns: Despite strong execution, some analysts believe the stock is overvalued. This means that while there is short-term upside potential, the long-term gains might be limited.
- Future Profitability: Affirm's CEO has committed to achieving and maintaining profitability on a GAAP basis by the end of the fiscal year, which is a positive sign for the company's financial health.
In summary, Affirm's recent performance has been stellar, driving a significant rise in its stock price. However, potential investors should weigh the short-term benefits against long-term valuation concerns and keep an eye on the company’s future earnings reports for sustained profitability.