Affirm Investors Should ‘Sell Now, Buy Later,’ Analyst Suggests

Mandatory Credit: Photo by Jakub Porzycki/NurPhoto/Shutterstock (12310762i)Affirm logo displayed on a phone screen and Affirm website displayed on a laptop screen are seen in this illustration photo taken in Krakow, Poland on August 16, 2021.
Jakub Porzycki/NurPhoto/Shutterstock / Jakub Porzycki/NurPhoto/Shutterstock

Buy now, pay later (BNPL) giant Affirm has been struggling for some time, and now analysts are warning that the stock might drop further.

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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.

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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.

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“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.”

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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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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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