Affirm Stock Soars 40% After Fiscal Q4 Earnings Beat Estimates

Affirm Holdings Inc (NASDAQ:) has experienced a remarkable surge this week, with its stock price skyrocketing by 40% in just a few days following the release of its fiscal fourth quarter results. The fintech company, known for its buy now, pay later services, saw a 32% jump post-earnings on Thursday, and an additional 5% increase on Friday, signaling a potential turnaround.

Affirm has faced challenges in 2021, with its stock dropping by 10% year-to-date after reaching a peak of $165 per share. The company has been heavily impacted by high interest rates and inflation, which have made borrowing more expensive and raised funding costs for its installment loans. However, as interest rates are expected to decrease in the future, Affirm could see a positive impact on its financial performance.

The latest earnings report for the fiscal fourth quarter showcased significant improvements for Affirm. The company reported revenue of $659 million, a 48% increase year over year, surpassing analyst estimates. Transactions on the Affirm network surged by 42% year over year, with interest income growing by 57%. These positive results have moved Affirm closer to profitability, with a net loss of $45 million in the quarter, down from $206 million in the same period last year.

Looking ahead, Affirm CEO Max Levchin stated that the company aims to achieve profitability in the coming fiscal year and sustain it thereafter. The company anticipates growth in GMV and revenue for the next fiscal quarters, with a focus on improving profitability. While Affirm has received some price target upgrades, it is advised to closely monitor its progress in the upcoming quarters before considering an investment.

In conclusion, Affirm’s recent performance and strategic plans indicate a promising future for the company. Lower interest rates and a focus on profitability could drive further growth. However, investors should exercise caution after the recent price surge and track Affirm’s journey towards profitability in the near future.

Shares: