Last Updated: 19 Sep 2024
Executive Summary
Affirm Holdings Inc. (AFRM) is a leading provider of digital and mobile commerce platforms in the United States and Canada. Despite strong revenue growth, the company faces challenges due to negative profitability metrics and a high valuation. Analysts remain divided on the stock's outlook, with a mix of buy, hold, and sell ratings.
Company Overview
Affirm Holdings, Inc. offers a platform that enables merchants to offer point-of-sale financing to their customers. The company's platform provides a seamless checkout experience, allowing customers to spread out payments over time without paying high interest rates. Affirm generates revenue primarily through fees charged to merchants and interest earned on customer loans.
Fundamental Analysis
Revenue: Affirm's revenue has grown significantly in recent years, reaching $2.32 billion in the trailing twelve months. The company's revenue growth is driven by the increasing adoption of its platform by merchants and consumers.
Profitability: Despite strong revenue growth, Affirm has yet to achieve profitability. The company's EBITDA loss in the trailing twelve months was $365 million. Negative profitability metrics are a concern for investors.
Valuation: Affirm is currently trading at a price-to-sales ratio of 5.89 and a price-to-book ratio of 5.01. These valuations are relatively high compared to peers in the industry.
Technical Analysis
Trend: Affirm's stock price has been trending lower since its 52-week high of $52.48. The stock is currently trading below its 50-day and 200-day moving averages.
Support and Resistance: The stock has found support at the $30 level and resistance at the $45 level. A break above $45 could signal a bullish reversal, while a break below $30 could indicate further downside.
Short Term Outlook
In the short term, Affirm's stock price is likely to remain volatile. The company's negative profitability metrics and high valuation are likely to weigh on the stock. However, strong revenue growth and a potential rebound in consumer spending could provide some support.
Long Term Outlook
Affirm has the potential to become a major player in the digital and mobile commerce market. The company's platform is well-positioned to benefit from the growing trend of online shopping. However, the company needs to improve its profitability and address concerns about its valuation.
Analyst Recommendations
Analysts are divided on Affirm's stock. One analyst has a strong buy rating, five have buy ratings, nine have hold ratings, two have sell ratings, and one has a strong sell rating. The average analyst target price is $38.2.
