Max Levchin, co-founder of PayPal and chief executive officer of financial technology company Affirm, arrives at the Sun Valley Resort for the annual Allen & Company Sun Valley Conference, in Sun Valley, Idaho.
Drew Angerer | Getty Images
Affirm shares soared 34% on Thursday and were on pace for their best day in almost three years, after the provider of buy now, pay later loans beat on the top and bottom lines in its earnings report.
If the rally holds, it will be the third-biggest rally for the stock since the company’s IPO in January 2021. The stock was trading at $42.17 as of early afternoon.
Following the market close on Wednesday, Affirm said revenue in the fiscal fourth quarter climbed 48% from a year earlier to $659 million, and that its net loss narrowed to $45.1 million from $206 million in the same period a year ago. The company beat estimates for revenue and reported a narrower-than-expected loss.
For the current quarter, Affirm sees revenue in the range of $640 million and $670 million. Analysts polled by LSEG called for revenue of $625 million.
Affirm CEO Max Levchin said in a note to shareholders that the company set a new goal of hitting operating profitability on a GAAP basis by the fiscal fourth quarter of 2025.
Analysts for Mizuho called it a “killer quarter” for Affirm in a note on Thursday, and said the “prospect of turning GAAP operating income-positive” will be “a major milestone.”
Even after Thursday’s rally, Affirm shares are still down about 14% for the year, while the Nasdaq is up 18%. But the stock has been trending higher lately, up 50% in August. Federal Reserve Chairman Jerome Powell signaled Friday that lower interest rates could be coming as soon as September.
Bank of America analysts said in a note last month that rate cuts would be beneficial to Affirm’s funding costs and for gain on loan sales. The company moved its merchants to a 36% APR cap on loans, up from 30% previously, and analysts said this “should remain a tailwind for yields and GMV growth.”
Mizuho projects that a new Apple Pay partnership could add $12 billion to Affirm’s total addressable market once it goes live later this year.
