Affirm (AFRM) Valuation Check After New Five-Year Amazon Partnership Extension Boosts Investor Interest

Affirm Holdings (AFRM) just locked in a fresh five year extension with Amazon, a move that immediately lifted the stock and, more importantly, extends Affirm’s reach across Amazon’s massive checkout funnel.

See our latest analysis for Affirm Holdings.

That Amazon extension comes on top of earlier tailwinds, such as Pacsun joining Affirm’s network and solid revenue and earnings beats. These factors help explain why the stock’s year to date share price return of 15.25 percent and three year total shareholder return of 657.52 percent still signal strong, if volatile, momentum despite a recent 90 day share price pullback.

If this kind of payments driven growth story has your attention, it could be worth exploring other high potential names using our high growth tech and AI stocks as a next step in your research.

With shares still trading at a notable discount to Wall Street targets despite rapid revenue and profit growth, investors now face a pivotal question: Is Affirm misunderstood value, or is the market already pricing in years of expansion?

Most Popular Narrative: 22.3% Undervalued

With Affirm Holdings last closing at $72.04 against a narrative fair value in the low $90s, the story assumes investors are still underappreciating future earnings power.

In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 56.5x on those 2028 earnings, down from 532.4x today. This future PE is greater than the current PE for the US Diversified Financial industry at 16.4x.

Read the complete narrative.

Curious what kind of revenue surge, margin lift, and earnings reset could earn a premium multiple like that, even after compression from today? Read on.

Result: Fair Value of $92.71 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained upside also hinges on avoiding setbacks, such as losing a major enterprise partner or seeing BNPL competition compress margins faster than expected.

Find out about the key risks to this Affirm Holdings narrative.

Another View: Rich on Earnings Metrics

While the narrative fair value suggests upside, earnings based metrics flag a very different picture. At roughly 102 times earnings versus a 13.6 times industry average and a 30.8 times fair ratio, Affirm screens expensive, raising the risk that any stumble could trigger a sharp de rating.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Affirm Holdings Narrative

If you see things differently or would rather dig into the numbers yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your Affirm Holdings research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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