Fintech company Affirm Holdings, Inc. (NASDAQ: AFRM) reported mixed results for the fourth quarter ended June 30, 2022. The mixed results were marked by revenues surpassing expectations but earnings missing the same. However, the company’s guidance rattled investors, and the stock plunged in Thursday’s after-hours trading.
Q4 Results Snapshot
Affirm reported quarterly revenues of $364.1 million, which denotes a growth of 39% from the corresponding quarter in the previous year. Moreover, the figure came in higher than the consensus estimate of $355.6 million.
However, the company’s losses widened to $0.65 per share from a loss of $0.46 per share reported in the previous year. Further, the figure came in wider than the consensus estimate of a loss of $0.53 per share.
For the Fiscal Year 2022, revenues came in at $1.3 billion, up 55% from the previous year. Moreover, losses narrowed to $2.51 per share from $2.94 per share in the prior year.
Growth in Key Operating Metrics
Affirm reported a gross merchandise volume (GMV) of $4.4 billion, which denotes a year-over-year growth of 77%. Active merchants and active consumers witnessed impressive yearly growth rates of 710.3% and 96%, to 235,000 and 14 million, respectively.
Notably, total transactions clocked a massive increase of 139% from the previous year. Also, transactions per active consumer saw a growth of 31% from the prior year.
However, the company’s operating loss widened to $277.2 million from $114.3 million in the year-ago quarter.
Guidance Comes in Lower than Estimates
The revenue forecast provided by Affirm for the first quarter and fiscal year 2023 falls short of expectations.
While the company expects sales to be between $1.63 and $1.73 billion for the fiscal year 2023, the figure is anticipated to be between $345 and $365 million for the first quarter. The consensus estimate for the same is pegged at $1.91 billion and $386.02 million for 2023 and the first quarter, respectively.
Hedge Funds Are Loading up on Affirm Stock
Lately, hedge funds have turned optimistic about Affirm and are increasing their position in the stock.
TipRanks’ Hedge Fund Trading Activity tool shows that hedge fund confidence in AFRM is currently Positive. Moreover, the cumulative change in holdings across the six hedge funds that were active in the last quarter was an increase of 38,500 shares.
Is AFRM a Buy Now?
Overall, the consensus among analysts for Affirm stock is a Hold based on four Buys, five Holds, and three Sells. The average AFRM stock price prediction of $34.82 implies an upside potential of 11.5% from current levels. Shares have declined 55.4% over the past year.
Final Thoughts
Affirm’s growth in revenues and operating metrics are signs of the company’s competitive strength. However, widening losses continue to remain a concern for the company. Moreover, its guidance has failed to enthuse investors, as can be gauged from its price movement.
Read full Disclosure
