Affirm: Still A Better Buy Later
- Affirm plunges following a weak sequential guidance for FQ4.
- The BNPL service continues to onboard Shop Pay merchants providing a substantial growth opportunity.
- The fintech takes on more credit risk than probably understood by the market at the time of the overhyped IPO.
- The stock remains expensive based on pure revenue metrics of 14x FY22 estimates.
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Update - July 19
The lower reset continues.
-Mizuho Bank analyst Dan Dolev trims Affirm Holdings' (NASDAQ:AFRM) price target as it faces increased competition from Apple Pay's buy-now-pay-later product.
-Reduces price target to $76 from $90; the target still implies potential 32% upside to AFFRM's closing price of $57.50 on Friday.
-Mizuho Bank's survey of 178 Apple Pay users indicates 54% are willing to try a potential Apple Pay BNPL product; it also signals significant customer overlap as 60% of Apple Pay users also use BNPL.
-Dolev notes that Affirm is less vulnerable than other BNPL providers given more modest customer overlap with Apple Pay (20% vs. 20-30% for others) and a higher AOV.
Update - July 14
All of these hot companies have to go through periods of copycat competitors. $AFRM will surely come out of this stronger, but the road will be volatile.
-Apple (NASDAQ:AAPL) is developing in partnership with Goldman Sachs (GS -1.0%), a new service that will allow consumers to pay for Apple Pay purchases in installments, putting it in direct competition with Affirm Holdings (AFRM -10.4%) and PayPal (PYPL -0.3%) for "Buy Now, Pay Later" payment options, Bloomberg reports, citing people with knowledge of the matter.