Affirm Holdings Stock Surges After Firm Signs Its Largest Ever Capital Partnership Of $4B With Sixth Street: Retail Cheers The Deal

The firm said that Sixth Street through its asset based finance platform will invest up to $4 billion by purchasing Affirm’s loans in a unique AssetCo structure pursuant to a three year, forward flow agreement.

Shares of buy-now-pay-later firm Affirm Holdings Inc (AFRM) were trading higher by over 3% on Friday morning after the company announced it has signed a long-term capital partnership with investment firm Sixth Street, representing the largest capital commitment secured by it to date.

The firm said that Sixth Street, through its asset-based finance platform, will invest up to $4 billion by purchasing Affirm’s loans in a unique AssetCo structure pursuant to a three-year forward flow agreement.

Affirm noted that the transaction provides additional off-balance sheet funding with the ability to extend up to more than $20 billion in loans over the next three years as the company continues to scale its payment network.

Brooke Major-Reid, Chief Capital Officer at Affirm said that the partnership comes at a time as the firm strengthens and diversifies its platform to support its growth plans with capital efficient funding.

“Sixth Street’s expertise in asset-based finance, long-term capital and collaborative approach make them an ideal partner for Affirm. Over the last several years, we have been extremely thoughtful in working with a diverse mix of world-class investors as we empower more consumers and merchants with our honest financial products,” he said.

Affirm has more than 19 million active consumers and generated over $28 billion in gross merchandise volume (GMV) for the last twelve months ending Sept. 30, 2024. Its total funding capacity stood at  $16.8 billion, growing by more than 50% over the last two years.

Following the announcement, retail sentiment on Stocktwits jumped into the ‘bullish’ territory (61/100) from ‘bearish’ a day ago, accompanied by high message volumes.

Retail chatter on Stocktwits shows the prevailing enthusiasm over the news.

Recently, BTIG analyst reportedly raised its price target on the stock to $81 from $68, while keeping a ‘Buy’ rating on the shares as it expects fintechs "to occupy much of the debate in 2025."

Shares of Affirm have gained over 47% since the beginning of the year.

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