E-commerce network and solutions platform provider Affirm (NASDAQ: AFRM)
stock is rallying off its post-IPO lows as ecommerce continues to flourish in a post-pandemic era as reopenings
continue to get underway. The Company provides of payment financing options for purchases from popular brands like the Moon Pod, Peloton (NASDAQ: PTON)
, Dyson, Casper (NASDAQ: CSPR)
along with offerings
from over 6,500 merchants on its platform. Merchants are enamored with the boost in sales when Affirm enables customers
to make monthly installment payments, also known as buy-now-pay-later (BNPL) programs, through them. Ecommerce coupled with BNPL comprise strong secular tailwinds
that should expand growth. Consumers are enamored by the frictionless and streamlined manner of making large purchases in smaller bite-size payments. The Company makes fees from both the customer and merchant all while facilitating the sale. Payment plans can range from three months up to 48 months with many interest-free options. The pandemic
has accelerated e-commerce adoption by a decade and its showing to be a lot stickier than analysts assumed as it becomes a pivotal cornerstone of the new normal
. It’s a partnership with Shopify (NASDAQ: SHOP)
enables over 10,000 merchants on its platform to provide ShopPay BNPL plans powered by Affirm’s technology. Prudent investors seeking to gain exposure in e-commerce regardless of the brand with a major BNPL facilitator can look to build a position in Affirm shares at opportunistic pullback levels.
Q3 Fiscal 2021 Earnings Release
On May 18, 2021, Affirm reported its fiscal Q3 2021 results for the quarter ending Mar 2021. The Company reported an earnings-per-share (EPS) loss of (-$1.06) versus (-$0.26) consensus analyst estimates, an (-$0.80) miss. Revenues grew 66.8% year-over-year (YoY) to $230.67 million, beating analyst estimates for $197.94 million. Active merchants doubled to nearly 12,000 by March 31, 2021 from year-ago. Average transactions per active customer were 2.3, up 10% YoY. The Company completed its acquisition of Returnly, a leader in online return experiences and post-purchase payments serving over 1,800 merchants and eight million shoppers.
Affirm Founder and CEO Max Levchin stated, “Affirm’s strong third-quarter results reflect continued progress toward building the most valuable and trans parent financial network for consumers and merchants. During the period, we more than doubled the number of merchants on our platform, accelerated GMV (gross merchandise value) growth to 83%, and increase active consumers 60% year-over-year” He continued, “We are seeing strong momentum in our business as we advance our growth strategy. In recent weeks, we have activated ShopPay Installments powered by Affirm for more than 10,000 Shopify merchants. We expect this number to significantly increase as we move towards general availability in June.”
Raised Q4 Fiscal 2021 Guidance
Affirm raised its fiscal Q4 2021 revenues to come in between $215 million to $225 million versus $208.17 million consensus analyst estimates. The Company expects to see GMV growth accelerate in categories with “pent-up demand”, including travel and ticketing, which grew 50% YoY in Q3. The merchant network growth will lead to more adoption of BNPL which adds directly to the top and bottom line. The bar has been set rather low heading into the reopening as the new consumer preference is to shop and compare online before making the trip to the brick and mortar stores. The convenience and making expensive purchases in bite-size pieces makes BNPL one of the strongest tailwinds that consumers will drive for the foreseeable future.
AFRM Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for AFRM stock. AFRM stock peaked near the $147.46 Fibonacci (fib) level after its IPO and managed to collapse as low as $46.50 during the pandemic before staging a rally. The weekly rifle chart has rallied to a make or break set-up as the weekly 5-period MA support is rising at $64.20 to attempt a crossover through the 15-period MA at $65.73. The weekly stochastic has a mini pup nearing the 40-band. The daily rifle chart is also in a make or break inversely with the falling 5-period MA at $64.63 crossing down through the 15-period MA at $65.21 as the daily stochastic is in a mini inverse pup. The daily market structure low (MSL) buy triggered on the breakout above $54.61. The daily lower Bollinger Band (BBs) sit near the $56.79 fib with upper BBs at $72.22. Prudent investors can monitor for opportunistic pullback levels at the $62.37 fib, $59.52 daily MSH trigger, $56.79 fib, $54.61 daily MSL trigger, $52.98 fib, $47.62 fib, and $43.58 fib. Upside trajectories range from the $78.09 fib up to the $104.41 fib level.
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