Affirm Stock Price Forecast September 2021 – Time to Buy AFRM Stock?

Affirm (AFRM) stock was trading sharply higher in US premarket price action today. The stock has been in an uptrend and is up 40% over the last month. What’s the forecast for AFRM stock and should you buy this BNPL (buy-now-pay-later) stock in September?

AFRM released its fiscal fourth-quarter 2021 earnings yesterday after the US markets closed. The earnings pleased markets and the stock was over 22% higher in pre-market price action today.

Affirm stock price earnings

Affirm reported revenues of $261.8 million in the quarter which were 71% higher than the corresponding period last year and were higher than the $224.4 million that analysts were expecting. The total revenues after adjusting for transaction costs was $147.7 million as compared to $107.6 million last year.

Meanwhile, while its revenues increased in the quarter, its losses also swelled and were higher than what analysts were expecting. The company posted a net loss of $128.2 million in the quarter as compared to a net income of $34.8 million in the corresponding quarter last year.

67% of all retail investor accounts lose money when trading CFDs with this provider.

Key takeaways from AFRM earnings

AFRM reported a GMV (gross merchandise value) of $2.5 billion in the quarter which was 106% higher than the last year. The active merchants on the platform increased over five-fold to 29,000. These include several Shopify merchants. During the quarter, the company had expanded its partnership with Shopify. The total active customers on the platform also almost doubled to 7.1 million.

Expressing optimism over the results, Affirm CEO Max Levchin said “Affirm’s strong results this quarter and fiscal year demonstrate the progress we are making in rapidly expanding our network.”

Affirm stock provided upbeat guidance

Affirm provided upbeat guidance which was ahead of what analysts were expecting. In the fiscal year 2022, the company expects to have GMV between $12.45-$12.75 billion. It expects to post revenues between $1.16-$1.19 billion in the year. Analysts were expecting the company to report revenues of $1.16 billion in the fiscal year 2022. Meanwhile, AFRM expects to post an operating loss between $135-$145 million in the year.

Here it is worth noting that these forecasts don’t account for any contribution from the Amazon partnership which was announced last month. As part of the partnership, select Amazon customers in the US will be able to pay for purchases above $50 in monthly payments. AFRM said that “Amazon and Affirm are testing with select customers now, and in the coming months, Amazon plans to make Affirm more broadly available to its customers.”

Amazon partnership

The guidance also does not assume any contribution from Affirm Debit+. That said, if the partnership between AFRM and Amazon is expanded to the majority of Amazon’s US customers, it could be a potential game-changer for AFRM. JPMorgan Chase estimates that the 2022 GMV for Amazon could be $500 billion which is almost 40 times the GMV that AFRM is projecting for its fiscal year 2022.

Commenting on the Amazon deal, Levchin said “The way we do our business — not just with Amazon, but with every single one of our partners — we bring the same ethos to these conversations as we do with everything else with our consumers, with our smaller partners.”

Affirm stock price forecast

Meanwhile, Wall Street analysts have split ratings on Affirm stock. Of the 11 analysts polled by CNN Business, six rate AFRM stock as a buy while four rates it as a hold. Only one analyst has a sell or equivalent rating on the stock.

AFRM has a median target price of $85, which implies a downside of 7.6% over current prices. Its lowest target price is $56 which is a discount of over 39% while the highest target price of $124 is a premium of 34.9% over current prices.

Over the last couple of weeks, several analysts have raised their target prices for AFRM stock. After the earnings release, DA Davidson raised its target price from $65 to $85 while maintaining its neutral rating. After the Amazon partnership, RBC Capital Markets had raised its target price to a street high of $124. Truist Securities had also increased its target price from $82 to $120.

The BNPL market is looking strong

The BNPL market is looking strong and even the tech giants like Apple seem interested. Last month, Square also announced the acquisition of Australian BNPL company Afterpay for $29 billion in an all-stock transaction.

Affirm stock price valuation

Affirm now trades at an NTM (next-12 months) EV (enterprise value)-to-revenue multiple of 23.1x. While the multiples might seem high in absolute terms, they are reflective of the optimism towards fintech names, especially in the BNPL industry.

AFRM stock is looking bullish on the charts too. It is trading above all the key moving averages which is a bullish sign. The MACD (moving average convergence divergence) also gives a buy signal. The 14-day RSI (relative strength index) is currently at 64.3 which is a neutral indicator, but getting near the overbought zone. RSI values above 70 signal overbought positions.

Overall, AFRM looks like a good fintech name to own given the strong growth outlook. The partnership with Amazon looks a step in the right direction and more such deals can be expected in the future as the BNPL market continues to gain traction.

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