Insights

Why Affirm Stock Sagged 38% in April

What happened
Shares of buy now, pay later company Affirm Holdings (NASDAQ: AFRM) dropped 38% in April, according to data provided by S&P Global Market Intelligence. General economic trends weighed on the company’s stock as investors continue to be wary of companies highly affected by inflation and rising interest rates as well as pressure in consumer spending trends. 
Affirm’s price has fallen even further so far in May, losing another 18% of its value in the stock sell-off. 
Image source: Getty Images.

So what
Affirm went public just over a year ago, and it’s been up and down since then. It’s run by an experienced management team led by Max Levchin, part of the PayPal Holdings founding team, with a compelling fintech premise that harnesses trends in shopping and technology to provide a service with practical value. 
That’s resulting in strong growth. In the second fiscal quarter (ended Dec. 31), revenue increased 77%, and gross merchandise volume (GMV) increased 115%. Affirm has bolstered its business with many partnerships and new products, such as an expanded partnership with Poshmark and some banking services, such as savings accounts.
It’s also the exclusive buy now, pay later partner for both Amazon and Shopify, giving it access to a massive shopper audience and expanding its organic growth opportunities.
However, there have been some kinks in what looks like a solid trajectory. Losses piled up in the second quarter from $27 million last year to $160 million this year. Some investors are also questioning what kind of future there is for a company specializing in what might be a niche fintech business, especially when there seems to be a wide array of providers. Tied into that, there are fears about how well a buy now, pay later company can recoup its loans to credit card holders. 
Now what
Affirm stock is now trading at about half its initial public offering price of $49. Part of that is the overall market negativity toward high-growth and fintech stocks, and part of that is related to the company’s losses and questions about the business in general.
Management gave a business update in March and raised guidance from an original GMV projection of $3.61 million to $3.71 million to at least $3.71 million, and revenue from an original $3.25 million to $3.35 million to at least $3.35 million. It also said trending operating costs were better than expected, and that it has solid, multi-channel funding capabilities to underwrite its loans.
Affirm will report third-quarter earnings this week. While there’s ongoing volatility, investors may want to wait on this stock.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Affirm Holdings, Inc., Amazon, Poshmark, Inc., and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy. –

What happened

Shares of buy now, pay later company Affirm Holdings (NASDAQ: AFRM) dropped 38% in April, according to data provided by S&P Global Market Intelligence. General economic trends weighed on the company’s stock as investors continue to be wary of companies highly affected by inflation and rising interest rates as well as pressure in consumer spending trends. 

Affirm’s price has fallen even further so far in May, losing another 18% of its value in the stock sell-off. 

Image source: Getty Images.

So what

Affirm went public just over a year ago, and it’s been up and down since then. It’s run by an experienced management team led by Max Levchin, part of the PayPal Holdings founding team, with a compelling fintech premise that harnesses trends in shopping and technology to provide a service with practical value. 

That’s resulting in strong growth. In the second fiscal quarter (ended Dec. 31), revenue increased 77%, and gross merchandise volume (GMV) increased 115%. Affirm has bolstered its business with many partnerships and new products, such as an expanded partnership with Poshmark and some banking services, such as savings accounts.

It’s also the exclusive buy now, pay later partner for both Amazon and Shopify, giving it access to a massive shopper audience and expanding its organic growth opportunities.

However, there have been some kinks in what looks like a solid trajectory. Losses piled up in the second quarter from $27 million last year to $160 million this year. Some investors are also questioning what kind of future there is for a company specializing in what might be a niche fintech business, especially when there seems to be a wide array of providers. Tied into that, there are fears about how well a buy now, pay later company can recoup its loans to credit card holders. 

Now what

Affirm stock is now trading at about half its initial public offering price of $49. Part of that is the overall market negativity toward high-growth and fintech stocks, and part of that is related to the company’s losses and questions about the business in general.

Management gave a business update in March and raised guidance from an original GMV projection of $3.61 million to $3.71 million to at least $3.71 million, and revenue from an original $3.25 million to $3.35 million to at least $3.35 million. It also said trending operating costs were better than expected, and that it has solid, multi-channel funding capabilities to underwrite its loans.

Affirm will report third-quarter earnings this week. While there’s ongoing volatility, investors may want to wait on this stock.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Affirm Holdings, Inc., Amazon, Poshmark, Inc., and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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.

  • This field is for validation purposes and should be left unchanged.

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 - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!