Shares of the financial technology company Affirm Holdings (NASDAQ:AFRM) slipped 12.6% in Thursday’s after-hours of trading despite beating Q2 expectations. However, Mizuho Securities analyst Dan Dolev sees this decline as a “knee-jerk reaction” and expects the shares of the Buy Now Pay Later company to recover. The analyst reiterated the Buy recommendation on AFRM stock with a price target of $65.
Dolev added that Affirm’s Q2 performance was much better than expectations, with the company’s gross merchandise volume (GMV) and revenue coming higher than the prior guidance. Further, the analyst highlighted that the delinquency rate is showing a downward trend, which is positive.
With this backdrop, let’s zoom in on Affirm’s Q2 financial performance.
Affirm: Q2 Financial Numbers Exceed Expectations
Affirm Holdings delivered total revenue of $591.1 million, up 48% year-over-year. It surpassed Street’s projection of 520.8 million. Merchant network revenue increased by 41%, reflecting higher GMV led by expansion in its active merchant base. Meanwhile, Card Network revenue jumped 35% year-over-year.
The company is managing its delinquency rates well. As of December 31, 2023, its 30-day delinquency rates and its allowance rates for loan losses were flat.
Notably, Affirm reported an adjusted loss of $0.54 per share in Q4, down from a loss of $1.10 in the prior-year quarter. Moreover, it compared favorably to the analysts’ expectations of a loss of $0.72 per share.
Is Affirm a Good Stock to Buy?
Affirm stock has gained over 270% in one year. Given the significant increase in its value and macro pressure over consumers’ spending, Wall Street analysts remain on the sidelines.
Affirm stock has three Buy, nine Hold, and four Sell recommendations for a Hold consensus rating. Analysts’ average price target of $33.28 implies 32.39% downside potential from current levels.
