Morgan Stanley remains bearish on Affirm following Walmart announcement

Morgan Stanley notes Affirm (AFRM) announced that it has expanded its services with Walmart (WMT) to now offer pay-over-time options to self-checkout kiosks at 4,500 Walmart stores nationwide. The firm believes the announcement should be helpful from a gross merchandise value perspective, in addition to seasonal holiday strength and what appears to be a particularly strong Black Friday/Cyber Monday period for Buy Now, Pay Later. With that being said, the expansion of availability at Walmart likely won’t help overall customer mix, with the average Walmart customer older and lower income than the typical Affirm customer. This dynamic, coupled with the recent conversion of Amazon (AMZN) to the 36% APR threshold, could drive an uptick in delinquencies over the near-term. In order to sustainably grow the business, Affirm should focus its efforts on attracting younger consumers whose income and spend will grow, Morgan Stanley adds. The firm has an Underweight rating and a price target of $20 on Affirm’s shares.