Reassessing Affirm in 2025 After Its Triple Digit Rally and Recent Pullback

• Wondering if Affirm Holdings is still worth your attention after its massive run a few years back, or if the story has quietly changed while no one was looking?
• After a huge 3 year gain of 564.5%, the stock has cooled off recently, slipping 1.1% over the last week, 14.8% over the last month, and sitting at a modest 7.6% gain year to date with a 4.9% loss over the past year.
• Recent moves have come as investors reassess buy now, pay later players like Affirm in light of shifting consumer spending, regulation chatter, and competition from big tech and traditional lenders. Market narratives have swung between seeing Affirm as a long term fintech disruptor and treating it as a higher risk growth name that needs a clear path to sustainable profitability.
• Against that backdrop, Affirm currently scores 0/6 on our valuation checks. This suggests it does not screen as undervalued on any of the standard metrics in this valuation score. Next we will break down what different valuation approaches say about the stock and then finish with a more intuitive way to think about what Affirm might really be worth.

Affirm Holdings scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Affirm Holdings Excess Returns Analysis

The Excess Returns model looks at how much value a business can create over and above the return that investors require on their capital, then adds those future excess profits to today’s book value per share.

For Affirm Holdings, the starting point is a Book Value of $10.00 per share and a Stable EPS of $1.96 per share, based on weighted future return on equity estimates from 7 analysts. The Cost of Equity is estimated at $1.10 per share, implying an Excess Return of $0.86 per share. That excess is driven by an Average Return on Equity of 14.26%, applied to a Stable Book Value forecast of $13.72 per share, which in turn is based on weighted future book value estimates from 3 analysts.

When these excess returns are projected forward and discounted back, the model arrives at an intrinsic value of about $31.68 per share. This implies the stock is roughly 112.3% overvalued relative to the current price, suggesting investors are paying a steep premium for future profitability.

Result: OVERVALUED

Our Excess Returns analysis suggests Affirm Holdings may be overvalued by 112.3%. Discover 907 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Affirm Holdings.

Approach 2: Affirm Holdings Price vs Earnings

For profitable companies like Affirm, a price to earnings ratio is often the cleanest way to judge how much the market is willing to pay for each dollar of current earnings. In general, faster growing and less risky businesses deserve a higher PE multiple, while slower growth or higher risk typically justify a lower one.

Affirm currently trades on a PE of about 95.23x, which is far richer than the broader Diversified Financial industry average of roughly 13.56x and well above the peer group average of around 30.37x. To put this into more context, Simply Wall St calculates a proprietary “Fair Ratio” of 30.57x for Affirm, which reflects its specific mix of earnings growth prospects, industry, profit margins, market value and risk profile.

This Fair Ratio is more informative than a simple comparison with peers or the industry, because it adjusts for the fact that not all financial companies grow or carry risk in the same way. Comparing Affirm’s current PE of 95.23x to the Fair Ratio of 30.57x suggests the shares are trading at a substantial premium to what its fundamentals would usually justify.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Affirm Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce Narratives, a simple way to connect your view of a company’s story with a concrete financial forecast and a clear fair value. You outline what you think will happen to Affirm’s revenue, earnings and margins. The Simply Wall St platform, used by millions of investors via the Community page, turns that story into numbers, compares your Fair Value to the current market price to signal whether it might be time to buy or sell, and then keeps your Narrative dynamically updated as new news or earnings arrive. For example, a bullish investor might build a Narrative around strong global partnerships and margin expansion that supports a Fair Value near the top of the current analyst range. A more cautious investor could focus on competition, macro risk and merchant concentration and arrive at a Fair Value closer to the low end. Both perspectives are made explicit, trackable and directly comparable to today’s share price.

Do you think there's more to the story for Affirm Holdings? Head over to our Community to see what others are saying!

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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