Insights

Why Affirm Holdings Stock Climbed Higher Today

What happened

Affirm Holdings (NASDAQ: AFRM) had a good day on Friday, with its stock price up about 2.4% as of 3 p.m. It had gone up as much as 7% mid-morning from the previous day’s close, before settling down.

Affirm can attribute its good day to a strong earnings report from its partner Amazon.

So what

It has been a difficult year for Affirm, as the buy now, pay later company has struggled due to inflation, higher interest rates, a slowing economy, and high expenses. The stock price is down a whopping 73% year to date.

Despite that, it has maintained steady growth in payment volume, active users, and active merchants. One of those merchant partners is Amazon. Last year, Affirm inked a deal with Amazon to offer its installment payment service on most Amazon purchases over $50.

So, a good earnings report for Amazon was also good for Affirm. Amazon stock soared some 12% in early trading on Friday after beating revenue and earnings estimates in the second quarter. But the even better news for investors was the company’s third-quarter outlook, which estimated net sales of $125 billion to $130 billion, which would be up some 13% to 17% year over year. 

Now what

A healthy third-quarter outlook for Amazon should bode well for Affirm, as the e-commerce giant is one of its largest partners. As bleak as it has been this year, Affirm’s stock price is actually up 11% since the company posted its fiscal second-quarter results on May 12.

The company posts its fiscal third-quarter results on Aug. 25, so keep an eye on that to see if it can continue its positive momentum. It is a big hole to dig out of, and it’s not clear if it has hit the bottom yet, but the upcoming earnings should provide more clarity. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Affirm Holdings, Inc. and Amazon. The Motley Fool has a disclosure policy.

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