Stock Traders Buy High Volume of Affirm Call Options (NASDAQ:AFRM)

Key Points

• AFRM call-option activity surged: Investors purchased 34,696 call options, about 87% above the average daily volume. The stock rose $6.94 to $84.43 on heavier-than-usual trading volume.
• Affirm reported strong operating momentum: Quarterly revenue increased 33% year over year, while reported EPS of $4.62 far exceeded estimates. However, revenue fell short of expectations and the large GAAP profit was driven largely by a one-time tax benefit.
• Analysts remain broadly bullish but valuation is elevated: Several firms raised price targets, and the stock carries a “Moderate Buy” consensus rating with a $96.81 target. Concerns include its high earnings multiple, mixed ratings, and a recent insider sale of 100,000 shares.

Affirm Holdings, Inc. (NASDAQ:AFRM - Get Free Report) saw unusually large options trading on Friday. Investors acquired 34,696 call options on the stock. This is an increase of approximately 87% compared to the average daily volume of 18,557 call options.

Affirm Price Performance

NASDAQ:AFRM traded up $6.94 during trading hours on Friday, hitting $84.43. 8,760,020 shares of the company's stock traded hands, compared to its average volume of 5,210,522. Affirm has a 52 week low of $42.10 and a 52 week high of $100.00. The business's fifty day simple moving average is $77.37 and its two-hundred day simple moving average is $64.50. The company has a quick ratio of 11.32, a current ratio of 11.32 and a debt-to-equity ratio of 2.39. The firm has a market cap of $28.28 billion, a P/E ratio of 76.75, a P/E/G ratio of 3.10 and a beta of 3.71.

Affirm (NASDAQ:AFRM - Get Free Report) last issued its quarterly earnings results on Thursday, August 27th. The company reported $4.62 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.35 by $4.27. Affirm had a return on equity of 11.17% and a net margin of 9.63%.The firm had revenue of $1.07 billion during the quarter, compared to the consensus estimate of $1.11 billion. During the same quarter last year, the company posted $0.20 EPS. The company's revenue for the quarter was up 33.1% on a year-over-year basis. On average, research analysts anticipate that Affirm will post 1.24 earnings per share for the current fiscal year.

Insiders Place Their Bets

In other news, COO Michael Linford sold 100,000 shares of Affirm stock in a transaction dated Friday, June 26th. The shares were sold at an average price of $80.04, for a total value of $8,004,000.00. Following the completion of the transaction, the chief operating officer owned 117,984 shares in the company, valued at $9,443,439.36. This trade represents a 45.87% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. 11.01% of the stock is owned by corporate insiders.

Institutional Trading of Affirm

Institutional investors and hedge funds have recently made changes to their positions in the stock. Greenline Wealth Management LLC purchased a new position in Affirm in the fourth quarter worth $26,000. Triumph Capital Management purchased a new stake in Affirm during the third quarter valued at about $31,000. Strive Financial Group LLC bought a new stake in Affirm during the fourth quarter worth about $33,000. Larson Financial Group LLC lifted its stake in Affirm by 74.5% during the third quarter. Larson Financial Group LLC now owns 499 shares of the company's stock worth $36,000 after purchasing an additional 213 shares during the last quarter. Finally, Bogart Wealth LLC boosted its holdings in shares of Affirm by 2,381.0% in the 4th quarter. Bogart Wealth LLC now owns 521 shares of the company's stock worth $39,000 after purchasing an additional 500 shares in the last quarter. Hedge funds and other institutional investors own 69.29% of the company's stock.

Key Stories Impacting Affirm

Here are the key news stories impacting Affirm this week:

• Positive Sentiment: Strong operating performance: Affirm reported 33% year-over-year revenue growth, 36% gross merchandise volume growth and a 49% increase in adjusted operating income. Expanding margins, stable credit performance and a 103-basis-point decline in funding costs to 5.8% supported profitability. Affirm: Ignore The Ludicrous $1.6 Billion, Own The Real Story
• Positive Sentiment: Headline earnings beat estimates: Fiscal fourth-quarter EPS was $4.62 versus consensus estimates of roughly $0.33-$0.35, compared with $0.20 a year earlier. The earnings release and related coverage also pointed to better-than-expected GMV and continued momentum in the BNPL business. Affirm Stock Jumps After Earnings
• Positive Sentiment: Analyst support improved: BMO Capital Markets raised its price target to $101 and assigned an outperform rating, while Cantor Fitzgerald reaffirmed its overweight rating with an $88 target. Morgan Stanley also increased its target to $80, although it maintained an equal-weight rating.
• Positive Sentiment: International expansion: Affirm and Shopify launched Shop Pay Installments in Australia, extending Affirm’s exclusive partnership to another market and potentially broadening transaction volume over time. Affirm and Shopify launch Shop Pay Installments in Australia
• Neutral Sentiment: Fiscal 2027 outlook: First-quarter revenue guidance of approximately $1.2 billion was broadly in line with consensus, limiting the possibility of a major near-term forecast surprise.
• Negative Sentiment: Quality of the EPS beat is a concern: The unusually large GAAP profit primarily reflected a one-time tax allowance release rather than recurring earnings power. Revenue of $1.07 billion also fell short of the approximately $1.11 billion analyst estimate, making underlying operating metrics more important to investors.
• Negative Sentiment: Valuation and mixed ratings: With a high earnings multiple and a recent Zacks downgrade from strong buy to hold, some investors may question whether the operational gains are fully reflected in AFRM’s valuation.

Analyst Ratings Changes

AFRM has been the subject of a number of analyst reports. The Goldman Sachs Group raised their price target on Affirm from $90.00 to $106.00 and gave the stock a "buy" rating in a report on Thursday, July 9th. Oppenheimer set a $104.00 target price on Affirm in a report on Friday. JPMorgan Chase & Co. upped their price target on Affirm from $80.00 to $90.00 and gave the company an "overweight" rating in a research report on Wednesday, July 8th. Wolfe Research reissued an "outperform" rating on shares of Affirm in a report on Friday. Finally, Bank of America raised their price objective on shares of Affirm from $93.00 to $104.00 and gave the company a "buy" rating in a research report on Friday. One analyst has rated the stock with a Strong Buy rating, twenty-one have assigned a Buy rating and eight have given a Hold rating to the company's stock. Based on data from MarketBeat.com, the stock has an average rating of "Moderate Buy" and a consensus price target of $96.81.

Affirm Company Profile

Affirm Holdings, Inc is a financial technology company that provides point-of-sale consumer lending and payments solutions for online and in-store purchases. Its core product is a buy-now-pay-later (BNPL) platform that enables consumers to split purchases into fixed, transparent installment loans with no hidden fees. Affirm offers a range of financing options through merchant integrations, a consumer-facing mobile app and virtual card capabilities, and tools for merchants to offer alternative payment methods at checkout.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

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