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Affirm Stock Holding Firm with Investors
Stock Analysis & Ideas

Affirm Stock Holding Firm with Investors

Shares of Affirm Holdings (AFRM) closed 46.7% higher on Monday after investors lined up to buy its stock in bulk, as reflected through a sevenfold growth in trading volume. 

The sudden spike in its price and volume comes on the back of its deal with Amazon (AMZN). Specifically, the fintech that provides BNPL (buy now, pay later) services announced that it had partnered with Amazon to offer flexible payment to the latter’s customers. (Read more: Affirm Partners with Amazon to Offer Flexible Payment at Checkout)

This is important, as the deal with Amazon is likely to boost Affirm’s gross merchandise volumes, and in turn, its revenues. Therefore, I maintain a bullish outlook on Affirm stock. 

Investors cheered Affirm’s partnership with Amazon, and analysts were equally upbeat. Morgan Stanley’s James Faucette kept a buy rating on Affirm stock and raised the price target to $120 (20.5% upside potential) from $73. Faucette predicts that the Amazon partnership could significantly boost Affirm’s active consumer base and drive incremental profits. 

Meanwhile, Timothy Chiodo of Credit Suisse highlighted Affirm’s partnership with Amazon, Shopify (SHOP), and Walmart (WMT) and expects these partnerships to bolster the company’s competitive positioning and drive user additions. 

Echoing a similar sentiment, Dan Dolev of Mizuho Securities said that the company’s partnership with Amazon “could launch AFRM into higher orbit, making the fear of competition from Apple Pay earlier this summer seem like a long-forgotten bad dream.”

Dolev was referring to the pressure on Affirm stock, due to the increased competitive activity in the BNPL market. Affirm stock, which was listed on the NASDAQ earlier this year, lost a substantial portion of its value amid fears of heightened competition and Apple’s (AAPL) entry into the BNPL space. (See Affirm Holdings stock charts on TipRanks)

Now dismissing those fears, Dolev maintained a Buy rating on Affirm stock and raised his medium-term revenue estimates. Also, the analyst increased the price target to $110 (10.5% upside potential) from $76. 

Overall, on TipRanks, AFRM commands a Moderate Buy consensus rating, based on 6 Buys, 2 Holds, and 1 Sell. The average Affirm Holdings price target of $90.38 implies 9.3% downside potential to current levels.

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

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