Stock Shortfalls: Analysts Suggest Ditching BNPL After Affirm Comes Up Short

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

Affirm’s stock is reeling after the fintech company released its fiscal third-quarter revenue forecast below analysts’ expectations, which disappointed growth investors who had hoped for a more impressive outlook.

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Shares for the “buy now, pay later” provider dropped 17.2% to $48.60 after the company said it expects revenue in the current quarter of $325 million to $335 million, Barron’s reported. Wall Street originally had forecasts of $335.5 million. 

Revenue less transaction costs in the quarter are expected to be $138 million to $143 million, Barron’s added, but analysts at Piper Sandler had expected revenue less transaction costs of $177 million.

“Our advice to investors is to sell shares of Affirm, as there are no near-term growth catalysts for the stock,” David Trainer, chief executive of New Constructs, an independent investment-research firm, told Barron’s. Trainer wasn’t shocked to see guide expectations lower “because Affirm is losing market share, lacks competitive advantages, is unprofitable and faces intense competition.”

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Trainer believes that Affirm shares are worth just $10. Affirm shares have declined 51.7% in 2022.

CNBC reported that Affirm also released a tweet ahead of schedule about its earnings at 1:30 p.m. ET on Feb. 10, which has since been deleted. The tweet gave details of the company’s financial performance, suggesting that the company would beat revenue expectations, CNBC added. In a later tweet, Affirm blamed human error for its inadvertent release of financial results.

Affirm reported fiscal second-quarter revenue on Feb. 10 of $361 million, up 77% from a year earlier, and above analysts’ forecasts of about $329 million, Barron’s noted. The company also reported a loss of $0.57 per share in the period. Analysts’ originally expected a loss of about $0.32.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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