Affirm Holdings Share Price Forecast February 2022 – Time to Buy AFRM?
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Shares of financial technology company Affirm Holdings (NASDAQ: AFRM) are in the red today, after closing at $46.55 as of February 11th (19:59 EST). Affirm shares took a plunge after the BNPL service provider released its 2nd quarter earnings report. The report, which was partly leaked earlier in the day was released ahead of time eventually.
Affirm Holdings – Technical Analysis
The financial statement released by Affirm Holdings indicates that the market cap of the company is at $ 13.294 billion with total assets worth $6.952 billion. Revenue for 2021 for $870.46 million with a profit margin of -49.50% compared to $509.53 million in 2020. On a year over year basis, the company’s revenue increased by 77% to reach $361 million, which beat estimates by $28 million. On the other hand, Affirm Holdings’ net loss widened from $27 million to $160 million, missing expectations.
Moving averages for Affirm Holdings such as Exponential Moving Average (10)(60.54), Simple Moving Average (10)(62.09), Exponential Moving Average (20)(64.80), Simple Moving Average (20)(60.91), Exponential Moving Average (30)(70.69) are indicating a sell action. Oscillators such as Relative Strength Index (14)(34.51), Stochastic %K (14, 3, 3)(43.61), Commodity Channel Index (20)(−196.85) and Average Directional Index (14)(32.59) are neutral.
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Recent Developments
Affirm Holdings was founded by Max Levchin, Nathan Gettings, Jeffrey Kaditz, and Alex Rampel in 2012. It was founded as part of an initial portfolio of startup studio HVF. The company filed with the Securities and Exchange Commission in preparation for an IPO. It eventually debuted on NASDAQ On January 13th and raised $1.2 billion approx.
The number of active consumers for Affirm Holdings increased by 150% year over year to 11 million in the second quarter, and the transactions-per-active-customer average grew 15% to 2.5. Gross merchandise volume came in at $4.5 billion. Affirm’s total number of active merchants surged year over year from 8000 to 168000. This came as a result of the integration of its BNPL services into Shopify’s Shop Pay platform. It has reduced its dependence on Peloton Interactive by forging new partnerships with Amazon, Walmart, Target, and other retailers.
Peleton Interactive, an exercise bike maker was was still Affirm’s second-largest merchant partner during the second quarter. But none of Affirm’s top merchants accounted for more than 10% of its total GMV compared to 20% revenue from Peleton alone in fiscal 2021. Management now expects GMV to increase 76%-78% for the full year, and for its revenue to increase 48%-50%.
However, Affirm Holdings faces some risks as well. According to a recently conducted Credit Karma Survey, 34% of BNPL users had fallen behind on at least one payment. This may be the reason behind why the company boosted its provision for credit losses to 15% of its revenue in Q2. It also faces increasing competition from larger fintech companies like PayPal Holdings (NASDAQ:PYPL) and Block (NYSE:SQ). Both of them have added BNPL services into their digital payment platforms.
Should You Buy AFRM Shares?
Affirm has increased its size rapidly. However, the losses of the company seem unsustainable. Additionally, its claim of disrupting traditional credit card companies seems half-baked. The company is profitable even under normal accounting rules. Thus, investors should avoid Affirm shares for now. It has experienced a year-to-date stock price decline of more than 40%. At the same price levels, there are several better run fintech players that investors can go for.
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