Affirm Holdings, Inc. (NASDAQ: AFRM), one of America’s largest buy now pay later (BNPL) companies, offers a digital and mobile-first commerce platform. With a market capitalization of $5.13 billion, AFRM stock is trading near 52-week lows and lost more than 81% year-to-date.
After recording stupendous gains last year, shares of financial technology companies are faltering. Regulatory uncertainty, credit risk challenges, inflationary pressures, and rises in interest rates can be cited as spoilsports. To add, due to the impact of geopolitical macroeconomic factors, the market is experiencing huge volatility.
Nevertheless, with the U.S. market penetration of low single-digits, Affirm expects to record a sustained profitability run-rate on an adjusted basis by the end of the next fiscal year. Significant consumer demand for its products is likely to keep the momentum growing. Following recent upbeat quarterly results, the company has provided a strong outlook.
Affirm recorded upbeat third-quarter Fiscal 2022 results on the back of robust revenue growth, strong capital markets execution, and above-expectation credit performance. Moreover, the company’s measure of unit economics, revenue less transaction costs, came in at 4.7% of Gross Merchandise Volume (GMV). This exceeded the long-term targeted range of 3% to 4% of GMV.
Affirm registered a loss of $0.19 per share in the third quarter, below the Street’s estimated loss of $0.53 per share. The company reported a loss of $1.23 per share in the same quarter last year.
In other positive news, net revenues surged 54% year-over-year to $354.8 million and came well ahead of analysts’ expectations of $344.03 million. GMV jumped 73% to $3.9 billion.
During the quarter, active merchants rose to 207,000 from 12,000 on the back of the adoption of Shop Pay Installments by merchants on Shopify’s platform. Also, active consumers grew 137% to 12.7 million.
There was a surge in the number of total transactions to 10.5 million, up 162%.
Looking forward, for fiscal Q4 2022, Affirm expects GMV in the range of $3.95 billion to $4.05 billion, while revenue to land between $345 million and $355 million.
For Fiscal 2022 (ended June 30, 2022), the company anticipates GMV in the range of $15.04 billion to $15.14 billion, while revenue expectations range between $1.33 billion and $1.34 billion.
Wall Street’s Take
Following the results, Mizuho Securities analyst Dan Dolev maintained a Buy rating and a price target of $79 (337.92% upside potential).
Dolev said, “Although we are incrementally more bullish on Affirm and the Amazon partnership, the multiple reflects the recent double-digit decline in payments/fintech multiples as well as the rising risk of further delinquencies and charge-offs.”
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on six Buys, five Holds, and two Sells. The average Affirm Holdings price target of $55.15 implies 205.71% upside potential.
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), offers insight into Affirm’s performance.
According to the tool, a website traffic uptrend was visible. In fiscal Q3 2022, total estimated visits on affirm.com showed an increasing trend, on a global basis, representing a 152.11% jump from the second quarter and significant growth on a year-over-year basis.
The predictions that were based on TipRanks’ website visits data turned out to be correct, with Affirm Holdings reporting upbeat results in the third quarter of Fiscal 2022.
Hovering near a 52-week low, with decent analyst ratings, strong revenues, robust outlook, the rising popularity of products, and the company’s strategic partnerships to expand as factors in consideration for Affirm, investors might consider buying the dip on this stock for potential long-term gains.
Learn more about the Website Traffic tool in this video by Youtube sensation Tom Nash.
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