“BTIG Upgrades Affirm to Buy, Stocks Soar 7%”
Source: Davit Kirakosyan
Affirm Holdings Shares Surge
Shares of Affirm Holdings (NASDAQ:AFRM), a leading financial technology company, surged over 7% intra-day today. This significant rise came after BTIG analysts upgraded the stock from a Neutral position to a Buy rating, sparking investor interest.
The upgrade decision was primarily influenced by Affirm’s impressive trajectory towards GAAP profitability and its increasing dominance in the point-of-sale financing arena. According to the analysts, Affirm’s fiscal 2025 operating income margin is projected to reach 19%. This is almost on par with American Express’s 20% margin, and there is potential for Affirm to exceed this target as the company’s expense growth is expected to remain moderate.
Increasing Market Share in POS finance
The BTIG analysts highlighted Affirm’s increasing market share in the point-of-sale finance sector, which has gained momentum due to a surge in demand for buy-now-pay-later (BNPL) solutions. This rising demand is driven by macroeconomic pressures, such as increasing credit losses at traditional credit card companies like American Express.
Affirm’s growing gross merchandise volume (GMV), a key indicator of transaction volume, is projected to grow 30% year-over-year in fiscal 2025. This robust growth sets Affirm apart from traditional credit card issuers and is supported by stronger merchant partnerships and increasing consumer interest.
Shifts in Consumer Finance: A Boon for Affirm
The BTIG report also emphasized how broader shifts in consumer finance are proving beneficial for Affirm. Traditional credit providers are scaling back their operations due to adverse credit conditions, creating a lucrative opportunity for companies like Affirm. Furthermore, recent changes in regulatory measures could play a pivotal role in shaping the future of consumer finance.
The Consumer Financial Protection Bureau’s updated late-fee rules, for example, could make credit cards less appealing for consumers. This, in turn, could drive more consumers and merchants towards BNPL options, further bolstering Affirm’s position in the market.
Affirm’s Robust GMV Growth and Retail Partnerships
BTIG’s bullish outlook on the company’s prospects is reinforced by Affirm’s robust GMV growth, expanding margins, and strong retail partnerships. One of Affirm’s notable partnerships includes a deal with retail behemoth Walmart. Such partnerships enable Affirm to provide its BNPL services to a broader customer base, thereby driving its GMV growth and increasing its market share.
Conclusion
Overall, the upgrade from BTIG is a testament to Affirm Holdings’ strong market position and promising growth trajectory. Affirm’s focus on point-of-sale financing, aided by the rise in BNPL solutions, gives it a unique edge over traditional credit card issuers. As the financial landscape continues to evolve, companies like Affirm that are able to adapt and capitalize on these changes are likely to emerge as winners.
It’s important to keep an eye on Affirm’s performance in the coming quarters as they strive to meet their projected targets. If they succeed, they could set a new standard in the realm of consumer finance, potentially reshaping the way consumers and merchants interact.