Affirm Stock Dips After Weak Q4 Forecast, CFO Sees Growth Rate Moderating: Retail Pins Hopes On Long-Term Upside
Synopsis
The buy now, pay later (BNPL) firm’s gross merchandise volume, which implies the total value of all the transactions processed by Affirm, jumped 36% to $8.6 billion in Q3.
Affirm Holdings (AFRM) stock fell 8.4% in extended trading on Thursday after the company forecasted fourth-quarter revenue below Wall Street’s expectations.
According to FinChat data, the company projected fourth-quarter revenue between $815 and $845 million, while analysts expect it to report $841 million in revenue.
Its third quarter (Q3) revenue of $783 million was in line with estimates.
The buy now, pay later (BNPL) firm’s gross merchandise volume, which implies the total value of all the transactions processed by Affirm, jumped 36% to $8.6 billion.
Its active consumers rose 23% to 21.9 million, and its active merchant count grew 23% to 358,000.
The company said its direct-to-consumer GMV rose 50% to $2.4 billion, and Affirm Card GMV within this segment more than doubled to $807 million.
Affirm said the general merchandise and consumer electronics categories contributed significantly to growth. Newer merchant categories, such as professional and legal services, which it serves via partner platforms, rose almost 60%.
Its chief financial officer, Rob O’Hare, said the company's growth rates were elevated in April, but it expects growth to moderate from these levels.
The company’s allowances for credit losses rose to 5.7% from 5.3% in the year-ago quarter.
Affirm also signed a partnership agreement with Costco to provide its payment facilities to the retailer.
Earlier this week, the Consumer Protection Bureau relieved BNPL firms such as Affirm from a rule that classified BNPL providers as credit card issuers.
Retail sentiment on Stocktwits was in the ‘extremely bullish’ (94/100) territory, while retail chatter was ‘extremely high.’
One Stocktwits user said the firm's long-term “upside is still intact” and is set for a sharp bounce.
Another user said that people could prefer BNPL firms over credit cards if there is a recession.
Affirm stock has fallen 12.8% year to date (YTD).
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