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Decoding Affirm's (AFRM) 2022 Summer Spending Trend Report
Affirm Holdings, Inc. (AFRM - Free Report) recently provided 2022 summer consumer spending trends, revealing a growing interest in traveling. The payments solution provider reported that travel was in the second spot on the top spending list, while furniture and homewares was at the third spot. Apparel was in the fourth position.
The rising inflation is somewhat supporting the demand growth for Affirm as consumers are relying on its payment products to buy goods and services at higher prices. Furthermore, the relaxation of COVID-related restrictions triggered a socializing spree, boosting spending on flights. The total amount spent on flights in the summer of 2022 jumped five times year over year, while the same for hotels jumped more than 100%.
Affirm saw average home rentals purchases of around $1,560 this summer, while total spending on luggage and leather goods jumped 60% from last summer. Average pet supply purchases were more than $300 while average children’s apparel buying was close to $180. Spending on weddings also witnessed a significant increase.
The increase in spending reflects higher transaction volumes for payments companies. Considering the last reported quarter, Affirm’s net revenues improved 39.1% year over year to $364.1 million on higher transactions, servicing income and merchant growth. Active merchants increased to 235,000 from 29,000 while gross merchandise volume increased 77% to $4.4 billion. Total transactions were recorded at 12 million, up 139% from the year-ago quarter.
With increasing dependence on BNPL and similar services due to rising inflation, companies like Affirm are expected to benefit from higher transaction volumes in the coming quarters.
Over the past three months, shares of Affirm have increased 8.8% against 3.4% fall of the industry it belongs to.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Affirm currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services space are Marqeta, Inc. (MQ - Free Report) , PaySign, Inc. (PAYS - Free Report) and International Money Express, Inc. (IMXI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Oakland, CA, Marqeta provides card issuing and transaction processing services. The Zacks Consensus Estimate for Marqeta’s 2022 bottom line indicates 13.3% year-over-year growth.
Based in Henderson, NV, PaySign offers prepaid card products and processing services. The Zacks Consensus Estimate for PaySign’s 2022 earnings indicates 280% year-over-year growth.
Miami, FL-based International Money Express works as a money remittance services company globally. The Zacks Consensus Estimate for IMXI’s 2022 bottom line indicates 18.4% year-over-year growth.