Affirm Investors Should ‘Sell Now, Buy Later,’ Analyst Suggests
Wedbush Securities analyst David Chiaverini initiated coverage of Affirm at Underperform on June 8, citing concerns over rising competition in the BNPL space, as well as issues surrounding the company’s path to profitability and slowing e-commerce sales, Barron’s reported.
Shares of Affirm, which were down 6.1% on the morning of June 9, are also down 77% year-to-date.
The BNPL market is becoming increasingly crowded. Just this week, Apple announced new BNPL features for the iPhone Wallet at its 2022 Worldwide Developers Conference (WDC) on June 6, presumably in a move to directly compete with fintech giants such as Affirm, as GOBankingRates previously reported.
Indeed, one of the most notable new features coming to the Wallet app is “Apple Pay Later,” which enables users to split the cost of an Apple Pay purchase into four equal payments spread over six weeks with zero interest (and no fees) of any kind, according to a press release.
“We anticipate that increasing competition from both existing BNPL players and more traditional financial institutions, along with the looming threat of a recession, could lead to slower growth for Affirm in coming quarters,” Chiaverini wrote in a research note on June 8, Barron’s reported.
In an interview with Bloomberg, Affirm CEO Max Levchin said he was not worried about Apple’s BNPL move.
“I don’t think there’s much concern,” Levchin told Bloomberg. “There’s a lot of room for growth for all involved.” Buy now, pay later is used for fewer than 5% of U.S. transactions, he said.
Klarna CEO Appears Optimistic on BNPL’s Future
Other BNPL companies are also feeling the heat, including Klarna, which announced it was laying off 10% of its staff in May. CEO and co-founder Sebastian Siemiatkowski made the announcement to his employees in a pre-recorded video message according to CNBC.
Klarna’s Siemiatkowski had a different stance on Apple’s new feature, however. On June 7, he tweeted: “It is a great win for consumers worldwide that Apple is now embracing a better form of consumer credit. Plagiarism is also the highest form of flattery. Some more interesting dimensions of this announcement.”
He added: “This will accelerate the rise of REAL interest-free BNPL over traditional credit cards, which will benefit consumers massively. As Apple embraces it, perhaps media will become more curious to understand how BNPL is meaningfully better for consumers than traditional credit cards.”
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