Follow Affirm to never miss an important update.
Yields on government bonds dropped on Thursday as investors processed the Federal Reserve's recent decision to raise interest rates. For a lender like Affirm, the cost of borrowing money to fund its buy-now-pay-later loans is closely tied to these market rates.
When these yields fall, it generally leaves more room for Affirm to earn a profit on each transaction. This is particularly helpful for its interest-free loan business, where the company's costs are fixed but its revenue comes from the fees it charges merchants.
Source: Bloomberg Markets and Finance
Affirm has rolled out a new underwriting model that uses transformer technology, the same type of math that powers modern AI, to decide who gets approved for a loan. Instead of just looking at a credit score, this system analyzes the specific timing and order of a person's past transactions to better predict their ability to pay.
This is a core part of how the company competes with traditional banks. By using more granular data to price risk, Affirm aims to approve more customers than rivals while keeping its loan losses low. If the new model works as intended, it should help the company grow its transaction volume without taking on more bad debt.
Source: Business Wire
U.S. retail sales grew 1.2 percent in August, reversing a drop in July as shoppers spent more on back-to-school items and other goods. Growth was broad, with 12 out of 13 categories showing higher spending even as gasoline prices rose.
This is a positive sign for Affirm because its business depends on the total volume of transactions it processes at checkout. When consumers feel confident enough to spend more, it generally leads to more people using Affirm's buy-now-pay-later options and its physical payment card.
Source: Bloomberg Markets and Finance
Wolfe Research upgraded the lender to its version of a buy rating on Monday. The firm set a price target of $90, which is about 23 percent higher than where the stock currently sits. This follows a similar move from Goldman Sachs last week, as more analysts focus on the company's path to steady profits.
While the average analyst target across all firms is slightly higher at $97, this upgrade from a well-known firm is a positive sign. It suggests growing confidence that the company can keep growing its loan volume through its card and retail partnerships without seeing a spike in unpaid debts.
Source: Wolfe Research
Goldman Sachs raised its price target from $106 to $115 while keeping a buy rating on the stock. This move suggests the firm sees more room for the stock to rise from its current level of about $68. While this is a positive nudge, it is a routine target change rather than a shift in the firm's overall view. The average target among all analysts who follow the company now sits at $97.
Source: Goldman Sachs
Management consistently sets a bar they can clear, but the massive jump in recent profits shows the business is now outrunning even their own bullish forecasts.
| Expectation | |
|---|---|
| EPS | $0.34 |
| Revenue | $1.21B |