Insights

Here’s why Affirm Holdings was up big on Monday

Despite the recent pop, the fintech stock is still down roughly 33% year to date.
The post Here’s why Affirm Holdings was up big on Monday appeared first on The Motley Fool Australia. –

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Affirm Holdings (NASDAQ:AFRM) jumped 14.8% in Monday’s trading session, according to data from S&P Global Market Intelligence. The fintech stock gained ground following news that Square (NYSE:SQ) would be acquiring Afterpay (OTC:AFTP.F) in an all-stock deal valued at approximately $29 billion.

AFRM data by YCharts

Square published a press release on Aug. 1 announcing that it would be acquiring Afterpay, a competitor in the buy-now, pay-later category that Affirm Holdings operates in. It looks like demand for the service category is heating up, and investors poured into Affirm Holdings stock in response to the big buyout news.

So what

Square’s acquisition of Afterpay is expected to close in the first quarter of 2022. This fintech power player’s acquisition of the Australia-based buy-now, pay-later specialist could result in a tougher competitive landscape. However, the market mostly appears to be reading the move as an affirmation of Affirm Holdings’ positioning for growth and the untapped value in the broader service category. Square stock also closed the day up roughly 10.7%.

Now what

Square’s acquisition of Afterpay boosts Affirm Holdings’ visibility as a potential buyout target, though the company doesn’t necessarily need to look for large-scale merger opportunities in order to remain competitive. Mobile-focused payment and financing services have seen huge growth over the last decade, but the market for these services still has big room for growth in the U.S. and other regions, and it should be able to support a breadth of winners across a variety of service categories.

Affirm Holdings now has a market capitalization of roughly $17.1 billion and is valued at approximately 15 times this year’s expected sales.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Here’s why Affirm Holdings was up big on Monday appeared first on The Motley Fool Australia.

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More reading

Why the Afterpay (ASX:APT) share price is in the green today

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Afterpay and Zip shares on watch amid Apple Pay Later speculation

Keith Noonan has no positions in any stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., and Square. The Motley Fool Australia owns shares of 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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