Affirm share price rallies overnight, but how does it compare to Afterpay (ASX:APT)?

Is US-listed versus ASX-listed buy now, pay later. How do they compare?
The post Affirm share price rallies overnight, but how does it compare to Afterpay (ASX:APT)? appeared first on The Motley Fool Australia. –

The United States-based buy now, pay later (BNPL) company, Affirm Holdings Inc (NASDAQ: AFRM) rose 4.9% in overnight trade. As a result, the Affirm share price is now sitting at $110.98, which might prompt local investors to wonder how the US company stacks up against local BNPL legend Afterpay Ltd (ASX: APT).

Since joining the public markets in January this year the instalment payment provider has traded between US$46.50 and US$176.65. Yet, the erratic swings in the company’s share price have only amounted to a 14% gain for the year so far.

Not all too exciting when you consider an investment in the S&P/ASX 200 Index (ASX: XJO) delivered a 9.5% return over the same period without having your heart in your throat.

Nonetheless, let’s look at how Afterpay compares to Affirm after its share price rise last night.

Survival of the fastest growing

When it comes to the BNPL industry there aren’t too many companies worried about profitability. Instead, it’s all about growing the top line as fast as possible, taking market share from competitors in the process. For this reason, investors will seldom fret over the bottom line.

So, let’s lift the lid on Affirm and ASX-listed Afterpay’s last annual growth metrics.

Firstly, the gross merchandise volume (GMV) processed by BNPL companies is an important indicator of market penetration. In FY21, Affirm delivered a GMV of US$8.3 billion (A$11.57 billion), compared to Afterpay’s A$22.4 billion worth of underlying sales during the financial period.

Similarly, Afterpay claimed the trophy when it comes to active customers at the end of FY21. The ASX-listed company reported 16 million shoppers actively using its platform. Meanwhile, Affirm reached 7.1 million active customers using its product. But, how does this translate into real revenue for the companies?

Well, in FY21 Affirm recorded US$870.5 million (A$1,213 million) in revenue — representing an increase of 71% on the prior corresponding period. In comparison, ASX-listed Afterpay notched up A$836 million, which was an increase of 75% compared to the previous year.

Though these figures might seem relatively inconspicuous at first, the interesting aspect is how Affirm is driving roughly 45% more revenue from nearly half as much in underlying sales.

Looking a little closer at Affirm’s financial statements, it can be seen that the BNPL company made US$326.4 million in interest income in FY21. Whereas, Afterpay does not charge interest on any of its payments. Affirm offers 6 monthly payments and 12 monthly payments which both come with an annualised 15% interest rate.

How does Affirm’s share price compare to Afterpay on the ASX?

Compared to Afterpay’s abysmal ~25% share price fall, Affirm’s share price has provided a positive return for investors so far this year (as shown below).

Since being announced in August, Afterpay’s acquisition by Block Inc (NYSE: SQ) (formerly Square) has been jumping through all the hurdles that come with such a deal. For the ASX-listed company, it has meant that its share price has been tied to Block’s due to the all-scrip deal.

In turn, Afterpay’s ASX-quoted market capitalisation is now ~A$26.4 billion. In comparison, based on Affirm’s current share price, the US-listed company commands a market cap of A$43.5 million.

The post Affirm share price rallies overnight, but how does it compare to Afterpay (ASX:APT)? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Afterpay Ltd right now?

Before you consider Afterpay Ltd, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Afterpay Ltd wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Why Afterpay, Cardno, Mesoblast, and Woolworths shares are falling

ASX 200 (ASX:XJO) midday update: Afterpay takeover vote, Woolworths crashes

Zip (ASX:Z1P) shares just topped these end-of-year rankings

Afterpay (ASX:APT) shareholders vote in favour of Square takeover

5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Mitchell Lawler owns AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended AFTERPAY T FPO and Block, Inc. The Motley Fool Australia owns and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!