From Nasdaq: 2024-05-22 05:35:00

Affirm (NASDAQ: AFRM) saw a surge of investor interest during its IPO in January 2021, with shares rising to $168.52. Despite impressive growth rates and disruptive potential, Affirm’s stock price plummeted in the face of growing losses and valuation concerns. Affirm’s business faced headwinds from inflation, declining customer transactions, and intense competition in the BNPL sector.

While Affirm’s revenue and GMV growth rates accelerated, its adjusted operating margin also expanded as it secured new merchant deals. Despite the steady expansion of active customers and merchants, concerns remain about Affirm’s sustainable growth and delinquency rates.

Affirm anticipates revenue growth and adjusted operating margin to increase in the fourth quarter. Analysts expect continued revenue growth in fiscal 2025, but Affirm has yet to break even according to GAAP and non-GAAP metrics. With high debt levels and competitive pressures, Affirm’s long-term sustainability remains uncertain.

Investors should wait to see if Affirm can maintain its target growth rates and narrow its losses before considering an investment in the stock. The Motley Fool’s Stock Advisor team did not include Affirm in their list of top stocks, suggesting caution in approaching an investment in the company.

Leo Sun has positions in Apple. The Motley Fool has positions in and recommends Apple, Block, PayPal, and Peloton Interactive. As of May 13, 2024, stock Advisor returns have outperformed the S&P 500 since 2002.



Read more at Nasdaq: Is Affirm Stock a Buy?