Affirm Holdings (AFRM) AI Stock Analysis

• Market Cap: $18.25B
• Dividend Yield: N/A
• Average Volume (3M): 7.27M
• Price to Earnings (P/E): ―
• Beta (1Y): 3.06
• Revenue Growth: 46.27%
• EPS Growth: 74.39%
• Country: US
• Employees: 2,006
• Sector: Technology
• Sector Strength: 48
• Industry: Software
• EPS (TTM): -0.65
• Shares Outstanding: 279,294,900
• 10 Day Avg. Volume: 6,879,862
• 30 Day Avg. Volume: 7,267,321
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 7.03
• Price to Cash Flow (P/CF): 15.80
• P/FCF Ratio: 11.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $76.69
• Price Target Upside: 34.52% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17

Affirm Holdings' stock is buoyed by strong technical indicators and strategic partnerships, notably with Shopify, enhancing market positioning. However, profitability challenges and high valuation metrics somewhat offset these positives, resulting in a moderate overall score.

Positive Factors

Financial Performance

AFRM reported upbeat F2Q results marked by stellar RLTC at $419mn vs. $350-370mn guide & raising FY GMV guide from 'more than $34bn' to $34.74 to $35.34 billion.

Partnerships

Affirm has substantially broadened its distribution, reaching more customers and improving transaction frequency thanks to its partnerships with high-profile merchants such as Amazon and Walmart.

Negative Factors

Risks

Downside risks include deterioration of customer credit profile, stricter regulatory supervision and loss of major enterprise merchant partners.

Affirm Holdings Business Overview & Revenue Model

Company Description

Affirm Holdings, Inc. is a financial technology company that operates in the digital payments sector, primarily in the United States. Founded in 2012, Affirm provides consumers with a transparent and flexible payment option through its 'buy now, pay later' (BNPL) solutions. The company's core product allows customers to split purchases into installment payments over time, offering an alternative to traditional credit cards. Affirm partners with various merchants to integrate its services directly into the checkout process, enhancing consumer purchasing power while promoting financial responsibility.

How the Company Makes Money

Affirm makes money primarily through merchant fees and interest income. When consumers use Affirm to finance purchases, merchants pay Affirm a fee for facilitating the transaction, which is typically a percentage of the purchase amount. This fee compensates Affirm for the increased conversion rates and higher average order values that merchants experience by offering flexible payment options. Additionally, Affirm earns interest income by charging consumers who choose longer-term financing options. These consumers may incur interest charges, depending on the terms of the installment loan. Furthermore, partnerships with major retailers like Amazon and Shopify have expanded Affirm's reach and contributed significantly to its earnings by integrating Affirm's services into their platforms, thus increasing transaction volumes. Affirm also benefits from strategic partnerships with financial institutions and technology platforms, further enhancing its revenue streams.

Affirm Holdings Financial Statement Overview

Summary

Affirm Holdings shows promising revenue growth and strong gross margins, yet faces challenges with profitability and high leverage. Cash flow improvements are a positive sign, but sustainability will require addressing operational inefficiencies and managing debt levels effectively.

Income Statement

Affirm Holdings has demonstrated substantial revenue growth over the years, with a 58.9% increase from 2023 to 2024 TTM, indicative of strong market demand. However, the company is experiencing persistent net losses, resulting in a negative net profit margin of -17.7% in TTM. Gross profit margin stands at a robust 75.6%, showing effective cost management relative to revenue generation. Despite these strengths, the negative EBIT and EBITDA margins highlight ongoing operational challenges.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 2.51, indicating significant leverage, which could pose risks under adverse conditions. Return on Equity (ROE) remains negative at -15.7%, pointing to challenges in delivering shareholder value. On a positive note, the equity ratio is 27.9%, which provides some financial stability.

Cash Flow

Cash flow analysis shows an improvement in free cash flow, with a growth rate of 30.8% in TTM, suggesting better cash management. The operating cash flow to net income ratio is 1.23, reflecting a healthy conversion of net income into cash. Despite these strengths, reliance on financing activities remains high.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
2.52B	―	―	―	―	―
	Gross Profit
1.91B	1.48B	714.82M	772.84M	1.44B	337.32M
	EBIT
-256.37M	-615.85M	-1.20B	-866.05M	-383.67M	-75.47M
	EBITDA
-3.30M	-115.12M	-671.60M	-602.41M	-385.54M	-66.03M
	Net Income Common Stockholders
-446.20M	-517.76M	-985.35M	-707.42M	-441.03M	-112.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
―	―	―	―	―	―
	Total Assets
9.52B	9.52B	8.16B	6.97B	4.87B	1.40B
	Total Debt
6.42B	6.42B	5.34B	4.01B	1.86B	917.15M
	Net Debt
5.40B	5.40B	4.45B	2.75B	390.72M	650.09M
	Total Liabilities
6.79B	6.79B	5.62B	4.36B	2.29B	1.77B
	Stockholders Equity
―	―	―	―	―	―
Cash Flow		Free Cash Flow
380.47M	450.14M	-108.59M	-273.90M	-213.38M	-92.32M
	Operating Cash Flow
548.10M	450.14M	12.18M	-162.19M	-193.13M	-71.30M
	Investing Cash Flow
-1.88B	―	―	―	―	―
	Financing Cash Flow
1.23B	―	―	―	―	―

Affirm Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 57.01
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFRM, the sentiment is Negative. The current price of 57.01 is below the 20-day moving average (MA) of 69.55, below the 50-day MA of 64.06, and above the 200-day MA of 46.36, indicating a neutral trend. The MACD of -0.79 indicates Positive momentum. The RSI at 36.48 is Neutral, neither overbought nor oversold. The STOCH value of 11.59 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AFRM.

Affirm Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XYZ	74 Outperform	$36.82B	13.06	13.62%	―	10.06%	38060.98%
PYPL	73 Outperform	$66.75B	16.88	20.31%	―	7.10%	4.45%
AFRM	64 Neutral	$18.25B	―	-7.14%	―	46.27%	74.39%
UPST	64 Neutral	$5.78B	―	-20.31%	―	24.50%	49.38%
SOFI	64 Neutral	$14.35B	34.26	7.64%	―	29.33%	―
Sector *	59 Neutral	$22.39B	11.53	-18.05%	2.31%	5.00%	-25.89%
LC	53 Neutral	$1.33B	25.75	3.83%	―	3.63%	27.77%

Affirm Holdings Corporate Events

Affirm Holdings Signs New Agreement with Shopify

On February 14, 2025, Affirm, Inc., a subsidiary of Affirm Holdings, Inc., entered into a new Global Customer Installment Program Agreement with Shopify Inc., replacing the previous agreement. This partnership makes Affirm the exclusive provider of Shop Pay Installments in the U.S. and Canada and aims to expand into new markets, including the U.K. The agreement, effective for an initial three-year term, enhances Affirm’s market positioning by broadening its reach and maintaining exclusivity with Shopify, impacting stakeholders by potentially increasing merchant adoption and consumer usage globally.