Analysts Weigh Affirm Holdings Prospects Amid Slight Valuation Shift and Ongoing Growth Momentum

Affirm Holdings’ analyst fair value estimate saw a minor decrease to $96.31 from $96.48. Analysts cited continued momentum in gross merchandise volume and stable user spending, but noted slightly tempered projections for revenue growth and profit margins.

Analyst Commentary

Recent Street research has provided a range of perspectives on Affirm Holdings’ path forward. Analysts have highlighted both the strengths supporting recent price target increases and areas where more cautious sentiment persists.

• Bullish analysts see Affirm’s expansion of its product suite and international partnerships as key drivers for long-term growth and market differentiation.
• Affirm’s extension of its integration with Apple Pay, allowing in-store BNPL options, is viewed as reinforcing its best-in-class product positioning and unlocking new growth channels in untapped markets.
• Strong quarterly performance, highlighted by accelerating gross merchandise volume and solid user spending, supports upward price target revisions and optimism for recurring revenue growth.
• Affirm’s underwriting approach, including the absence of late fees, is cited as a transparency advantage that may drive improved customer acquisition and retention.

• Some cautious analysts point to tempered revenue and margin projections. This could constrain near-term upside despite strong recent results.
• There is focus on competitive pressures, particularly with other buy-now-pay-later providers becoming public. This may intensify comparisons and customer churn risk.
• Concerns remain regarding Affirm’s sensitivity to broader macroeconomic shifts. These could impact consumer spending patterns and credit risk profiles.
• Uncertainty related to the loss of a large enterprise client and its impact on future gross merchandise volume is being watched closely. At the same time, new growth opportunities are emerging.

What's in the News

• Affirm began sharing all customer buy now, pay later data with credit bureaus Experian and TransUnion. Klarna and Afterpay are delaying the sharing of most of their data due to concerns about the potential impact on consumer credit scores (The Wall Street Journal).
• Klarna, a major Affirm competitor, is considering reviving plans for a U.S. IPO as soon as September. This highlights increased competition in the buy now, pay later sector (Bloomberg).
• Affirm announced an expanded partnership with Wayfair, bringing its pay-over-time options to checkout ahead of major sales events and the holidays across all Wayfair brands.
• Affirm has formed partnerships with Fanatics and FreshBooks, extending its flexible payment offerings to sports, merchandise, and invoicing platforms in the U.S., UK, and Canada.

Valuation Changes

• Fair Value Estimate: Decreased slightly from $96.48 to $96.31, reflecting a minor downward adjustment.
• Discount Rate: Increased marginally from 8.06% to 8.09%, suggesting a modest rise in perceived risk or cost of capital.
• Revenue Growth: Lowered subtly from 23.69% to 23.47%, indicating slightly more conservative growth expectations.
• Net Profit Margin: Declined slightly from 13.86% to 13.79%, pointing to a minor recalibration of projected profitability.
• Future P/E Ratio: Increased from 52.26x to 52.75x, reflecting a slightly higher valuation multiple for future earnings.