Affirm (NASDAQ:AFRM) Shares Gap Up on Better-Than-Expected Earnings

Key Points

• Affirm shares jumped 10.2%, opening at $86.00 versus a prior close of $77.49, after the company reported quarterly EPS of $4.62—far above the roughly $0.35 consensus estimate.
• Underlying operations also strengthened, with revenue up 33.1% year over year, gross merchandise volume rising 36%, adjusted operating income increasing 49%, and funding costs declining to 5.8%. However, quarterly revenue of $1.07 billion missed estimates, and the unusually large EPS beat was primarily driven by a one-time tax allowance release.
• Analyst sentiment remains generally favorable, with a “Moderate Buy” consensus and average price target of $96.19, though valuation concerns remain given Affirm’s high earnings multiple and mixed analyst ratings.

Affirm Holdings, Inc. (NASDAQ:AFRM - Get Free Report)'s stock price gapped up prior to trading on Friday following a better than expected earnings announcement. The stock had previously closed at $77.49, but opened at $86.00. Affirm shares last traded at $85.78, with a volume of 6,684,154 shares trading hands.

The company reported $4.62 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.35 by $4.27. Affirm had a net margin of 9.63% and a return on equity of 11.17%. The firm had revenue of $1.07 billion for the quarter, compared to the consensus estimate of $1.11 billion. During the same quarter in the prior year, the firm posted $0.20 earnings per share. The business's revenue was up 33.1% on a year-over-year basis.

Key Headlines 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.

Wall Street Analysts Forecast Growth

Several brokerages have commented on AFRM. Royal Bank Of Canada increased their target price on Affirm from $77.00 to $80.00 and gave the company a "sector perform" rating in a research note on Friday, May 8th. Wolfe Research restated an "outperform" rating on shares of Affirm in a research note 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 report on Wednesday, July 8th. Needham & Company LLC increased their price objective on Affirm from $90.00 to $100.00 and gave the company a "buy" rating in a research report on Friday. Finally, Stephens lifted their price objective on Affirm from $55.00 to $75.00 and gave the stock an "equal weight" rating in a report on Friday, May 8th. One equities research analyst has rated the stock with a Strong Buy rating, twenty-one have issued a Buy rating and eight have issued a Hold rating to the company. Based on data from MarketBeat.com, the company currently has a consensus rating of "Moderate Buy" and an average price target of $96.19.

Insider Transactions at Affirm

In other Affirm news, COO Michael Linford sold 100,000 shares of Affirm stock in a transaction that occurred on 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 sale, the chief operating officer owned 117,984 shares of the company's stock, valued at approximately $9,443,439.36. The trade was a 45.87% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Corporate insiders own 11.01% of the company's stock.

Hedge Funds Weigh In On Affirm

Several hedge funds and other institutional investors have recently modified their holdings of AFRM. SBI Securities Co. Ltd. grew its stake in shares of Affirm by 83.4% during the 4th quarter. SBI Securities Co. Ltd. now owns 48,504 shares of the company's stock valued at $3,610,000 after purchasing an additional 22,054 shares during the period. Geode Capital Management LLC lifted its stake in shares of Affirm by 6.4% in the 4th quarter. Geode Capital Management LLC now owns 5,501,387 shares of the company's stock worth $408,433,000 after purchasing an additional 329,312 shares during the period. Vanguard Group Inc. lifted its stake in shares of Affirm by 1.8% in the 4th quarter. Vanguard Group Inc. now owns 24,847,206 shares of the company's stock worth $1,849,378,000 after purchasing an additional 428,138 shares during the period. SteelPeak Wealth LLC bought a new stake in Affirm during the first quarter valued at approximately $935,000. Finally, Legal & General Group Plc grew its position in Affirm by 25.4% during the fourth quarter. Legal & General Group Plc now owns 605,521 shares of the company's stock valued at $45,069,000 after buying an additional 122,584 shares during the period. 69.29% of the stock is owned by institutional investors.

Affirm Trading Up 10.2%

The firm has a market capitalization of $28.59 billion, a PE ratio of 77.61, a PEG ratio of 3.10 and a beta of 3.71. 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 stock's fifty day simple moving average is $77.37 and its 200 day simple moving average is $64.50.

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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