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Affirm's (AFRM) Shares Surge 9.7% on Debit+ Card Optimism
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Affirm Holdings, Inc.’s (AFRM - Free Report) shares gained 9.7% on Jul 11 due to Mizuho Securities analyst, Dan Dolev’s optimism regarding Affirm’s Debit+ card. The surge in Debit+ Google searches is somewhat similar to Block, Inc.’s (SQ - Free Report) initial buzz of its Square Cash Card in early 2017. Square Cash Card allows consumers to control their money by minimizing the friction in payments, similar to the Debit+ value proposition, allowing consumers to buy now and pay later.
The analyst estimates that the Debit+ product’s unique use case will boost AFRM’s volume growth rates to mid-30s in the medium term. The expected revenue and volume growth from Debit+ should help navigate the potential sales headwinds resulting from upcoming student loan repayment in July 2023.
Affirm’s new product, Debit+, is a hybrid card with the features of a debit card and a credit card. This debit card can be linked to an existing account and can be used to pay at merchant locations where Affirm is accepted. With more than $19 billion in gross merchandize value and 88% repeat customers as of Mar 31, 2023, Affirm’s business model adds value to customers’ lives.
The major strength of Affirm is its technology which aids it in pricing its products and risk assessment. AFRM allows customers to pay overtime and does not charge any hidden fees or late payment charges. It charges customers on a simple interest basis and is transparent in displaying exactly what the customer owes, reducing their burden.
Affirm is set to grow its business due to its collaboration with global giants, such as Amazon and Fidelity National Information Services, last month. These partnerships will enable customers to access buy now and pay later options and drive growth in merchant business. AFRM will make money from commissions charged to businesses, boosting the top line in the future.
The Zacks Consensus Estimate for AFRM’s fiscal 2023 revenues is pegged at $1.6 billion, indicating 14.6% year-over-year growth. Further, the consensus mark for fiscal 2024 revenues indicates an 18.1% jump from the year-ago level. This trend will likely help the company to become a profitable firm. The company is yet to register operating profit in the quarters ahead. However, modern and exciting products like Debit+ Card will bring the company closer to its goals.
Zacks Rank and Price Performance
Affirm currently has a Zacks Rank #3 (Hold). In the year-to-date period, shares of Affirm have gained 67.6% compared with 12.9% growth of the industry it belongs to.
The bottom line of Avis Budget outpaced estimates in each of the trailing four quarters, the average surprise being 65.2%. The Zacks Consensus Estimate for CAR’s 2023 earnings has moved north by 0.4% in the past 30 days.
IBEX’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 34.5%. The Zacks Consensus Estimate for IBEX’s 2023 earnings indicates a 55.3% rise, while the same for revenues suggests 6.4% growth from the prior-year reported figures.
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Affirm's (AFRM) Shares Surge 9.7% on Debit+ Card Optimism
Affirm Holdings, Inc.’s (AFRM - Free Report) shares gained 9.7% on Jul 11 due to Mizuho Securities analyst, Dan Dolev’s optimism regarding Affirm’s Debit+ card. The surge in Debit+ Google searches is somewhat similar to Block, Inc.’s (SQ - Free Report) initial buzz of its Square Cash Card in early 2017. Square Cash Card allows consumers to control their money by minimizing the friction in payments, similar to the Debit+ value proposition, allowing consumers to buy now and pay later.
The analyst estimates that the Debit+ product’s unique use case will boost AFRM’s volume growth rates to mid-30s in the medium term. The expected revenue and volume growth from Debit+ should help navigate the potential sales headwinds resulting from upcoming student loan repayment in July 2023.
Affirm’s new product, Debit+, is a hybrid card with the features of a debit card and a credit card. This debit card can be linked to an existing account and can be used to pay at merchant locations where Affirm is accepted. With more than $19 billion in gross merchandize value and 88% repeat customers as of Mar 31, 2023, Affirm’s business model adds value to customers’ lives.
The major strength of Affirm is its technology which aids it in pricing its products and risk assessment. AFRM allows customers to pay overtime and does not charge any hidden fees or late payment charges. It charges customers on a simple interest basis and is transparent in displaying exactly what the customer owes, reducing their burden.
Affirm is set to grow its business due to its collaboration with global giants, such as Amazon and Fidelity National Information Services, last month. These partnerships will enable customers to access buy now and pay later options and drive growth in merchant business. AFRM will make money from commissions charged to businesses, boosting the top line in the future.
The Zacks Consensus Estimate for AFRM’s fiscal 2023 revenues is pegged at $1.6 billion, indicating 14.6% year-over-year growth. Further, the consensus mark for fiscal 2024 revenues indicates an 18.1% jump from the year-ago level. This trend will likely help the company to become a profitable firm. The company is yet to register operating profit in the quarters ahead. However, modern and exciting products like Debit+ Card will bring the company closer to its goals.
Zacks Rank and Price Performance
Affirm currently has a Zacks Rank #3 (Hold). In the year-to-date period, shares of Affirm have gained 67.6% compared with 12.9% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the Business Services space are Avis Budget Group, Inc. (CAR - Free Report) and IBEX Limited (IBEX - Free Report) . Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Avis Budget outpaced estimates in each of the trailing four quarters, the average surprise being 65.2%. The Zacks Consensus Estimate for CAR’s 2023 earnings has moved north by 0.4% in the past 30 days.
IBEX’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 34.5%. The Zacks Consensus Estimate for IBEX’s 2023 earnings indicates a 55.3% rise, while the same for revenues suggests 6.4% growth from the prior-year reported figures.