The Ratings Game: Affirm’s stock rockets toward best day in 15 months but remains a polarizing play

by | Aug 25, 2023 | Stock Market

Affirm Holdings Inc. continues to draw mixed reactions as its stock explodes higher Friday in the wake of earnings. The buy-now-pay-later company’s report an evening earlier showed an “acceleration in transactions per active customer, suggesting engagement is ever stronger,” according to Mizuho analyst Dan Dolev. He called out that Affirm
topped its guidance on revenue less transaction costs, a key company metric, and saw a decline in delinquencies.

Dolev also called Affirm’s outlook “conservative yet upbeat, baking in student loan payments headwinds” as he reiterated a buy rating and $20 price target on the stock. Shares of Affirm roared as much as 31.0% higher in Friday morning action. It was more recently up 25.8%, which would make for its largest single-day percentage gain since May 13, 2022, when it advanced 31.4%. Barclays analyst Ramsey El-Assal was also upbeat, noting that the company’s projection for full-year revenue less transaction costs to be in line with last year’s performance came as an “upside surprise.” Further, he was encouraged by Affirm’s commentary on its debit-card product, which is adding 75,000 active cardholders each month and contributed $130 million in gross merchandise volume during the latest quarter. “Affirm Card growth appears to have reached a positive inflection point,” El-Assal wrote, as he reiterated an overweight rating and $19 target price on the stock. See also: PayPal’s stock could be near its ultimate bottom, analyst says Others remained more cautious, including Piper Sandler’s Kevin Barker, who acknowledged the “good quarter” but also flagged headwinds from funding costs. “[H]igher funding costs and a limited appetite from the secondary …

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