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Affirm Stock Soars 31.9%: A Signal for Investors to Hold Tight?
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Shares of Affirm Holdings, Inc. (AFRM - Free Report) surged 31.9% yesterday thanks to better-than-expected fourth-quarter fiscal 2024 results and optimistic guidance, including a goal to achieve operating income profitability on a GAAP basis in the fourth quarter of fiscal 2025. Its buy now, pay later (BNPL) services gained popularity during high inflation, driving its growth.
AFRM’s Key Q4 Drivers
Its fourth-quarter fiscal 2024 results revealed a 19% year-over-year increase in active merchants to 303,000. Strength in general merchandise and travel and ticketing categories boosted Gross Merchandise Volume (GMV) to $7.2 billion, a 31% jump from a year ago. It comfortably beat the Zacks Consensus Estimate of $6.9 billion. Total transactions of 24.7 million soared 42% from the year-ago period on the back of a significant rise in repeat customer transactions.
The company expects the momentum from unlocking the repeat customer transaction barrier to continue, which helped it curve lucrative guidance for fiscal 2025.
AFRM’s Fiscal 2025 Guidance
It expects a GMV of more than $33.5 billion in fiscal 2025, up from $26.6 billion in fiscal 2024. The adjusted operating margin is estimated to be higher than 18.4%, up from 16% in fiscal 2024. Affirm is focused on boosting transactions to achieve its profitability goals.
Why AFRM Investors Are Excited
Given its continuous addition of merchants to its network, its transaction growth target is likely to be achieved.
But, there are more.
When the interest rate is brought down, Affirm will enjoy lower funding costs. Also, its partnership with Apple, which will bring its BNPL solutions to Apple customers later this year, will add more depth to its network while boosting addressable market size and transactions. Furthermore, initiatives like international expansion will amplify its transaction growth efforts.
These factors make Affirm a strong candidate to retain in your portfolio. It currently carries a Zacks Rank #3 (Hold).
AFRM’s One-Month Price Performance
Thanks to yesterday’s jump, AFRM shares have gained 47.3% in the past month, outperforming the industry average of 1.9%.
The Zacks Consensus Estimate for Fidelity National’s current-year earnings indicates a 50.5% year-over-year jump. FIS beat earnings estimates in two of the trailing four quarters and missed twice. The consensus estimate for current-year revenues is pegged at $10.2 billion.
The Zacks Consensus Estimate for Paysign’s current-year bottom line indicates 75% year-over-year growth. The consensus estimate for PAYS’ current-year top line is pegged at $58 million, suggesting 22.6% year-over-year growth.
The Zacks Consensus Estimate for Remitly Global’s current-year earnings indicates a 53.9% year-over-year improvement. RELY beat earnings estimates in two of the trailing four quarters and missed twice, with an average surprise of 8%. The consensus estimate for current-year revenues suggests 31.8% year-over-year growth.
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Affirm Stock Soars 31.9%: A Signal for Investors to Hold Tight?
Shares of Affirm Holdings, Inc. (AFRM - Free Report) surged 31.9% yesterday thanks to better-than-expected fourth-quarter fiscal 2024 results and optimistic guidance, including a goal to achieve operating income profitability on a GAAP basis in the fourth quarter of fiscal 2025. Its buy now, pay later (BNPL) services gained popularity during high inflation, driving its growth.
AFRM’s Key Q4 Drivers
Its fourth-quarter fiscal 2024 results revealed a 19% year-over-year increase in active merchants to 303,000. Strength in general merchandise and travel and ticketing categories boosted Gross Merchandise Volume (GMV) to $7.2 billion, a 31% jump from a year ago. It comfortably beat the Zacks Consensus Estimate of $6.9 billion. Total transactions of 24.7 million soared 42% from the year-ago period on the back of a significant rise in repeat customer transactions.
The company expects the momentum from unlocking the repeat customer transaction barrier to continue, which helped it curve lucrative guidance for fiscal 2025.
AFRM’s Fiscal 2025 Guidance
It expects a GMV of more than $33.5 billion in fiscal 2025, up from $26.6 billion in fiscal 2024. The adjusted operating margin is estimated to be higher than 18.4%, up from 16% in fiscal 2024. Affirm is focused on boosting transactions to achieve its profitability goals.
Why AFRM Investors Are Excited
Given its continuous addition of merchants to its network, its transaction growth target is likely to be achieved.
But, there are more.
When the interest rate is brought down, Affirm will enjoy lower funding costs. Also, its partnership with Apple, which will bring its BNPL solutions to Apple customers later this year, will add more depth to its network while boosting addressable market size and transactions. Furthermore, initiatives like international expansion will amplify its transaction growth efforts.
These factors make Affirm a strong candidate to retain in your portfolio. It currently carries a Zacks Rank #3 (Hold).
AFRM’s One-Month Price Performance
Thanks to yesterday’s jump, AFRM shares have gained 47.3% in the past month, outperforming the industry average of 1.9%.
Image Source: Zacks Investment Research
Our Key Picks
Investors can look at some better-ranked stocks from the broader Business Services space like Fidelity National Information Services, Inc. (FIS - Free Report) , Paysign, Inc. (PAYS - Free Report) andRemitly Global, Inc. (RELY - Free Report) . While Fidelity National currently sports a Zacks Rank #1 (Strong Buy), Paysign and Remitly Global carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Fidelity National’s current-year earnings indicates a 50.5% year-over-year jump. FIS beat earnings estimates in two of the trailing four quarters and missed twice. The consensus estimate for current-year revenues is pegged at $10.2 billion.
The Zacks Consensus Estimate for Paysign’s current-year bottom line indicates 75% year-over-year growth. The consensus estimate for PAYS’ current-year top line is pegged at $58 million, suggesting 22.6% year-over-year growth.
The Zacks Consensus Estimate for Remitly Global’s current-year earnings indicates a 53.9% year-over-year improvement. RELY beat earnings estimates in two of the trailing four quarters and missed twice, with an average surprise of 8%. The consensus estimate for current-year revenues suggests 31.8% year-over-year growth.