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Affirm Slides 12.3% YTD Despite Strong Growth: Buy the Dip or Wait?
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Key Takeaways
AFRM is down 12.3% YTD despite strong Q3 fiscal 2026 growth and another earnings beat.
Affirm hit 26.8M active consumers, 45.3M transactions, and 515K merchants as adoption accelerates.
Affirm's funding debt rose to $2.4B, with leverage concerns and inflation fears weighing on sentiment.
Shares of Affirm Holdings, Inc. (AFRM - Free Report) have slipped 12.3% year to date, a clear underperformance versus the S&P 500’s 8.9% rise. Still, the drop looks less severe when viewed in the context of its peers. The broader industry is down 13.3%, while other major buy now, pay later (BNPL) players have been hit harder. PayPal Holdings, Inc. (PYPL - Free Report) has declined 25% and Klarna Group plc (KLAR - Free Report) has plunged 47.7% over the same stretch.
Price Performance – AFRM, PYPL, KLAR, Industry & S&P 500
Image Source: Zacks Investment Research
A major overhang has been persistent inflation anxiety. Geopolitical disruptions and uneven economic signals have kept markets focused on one key risk: whether consumers can continue to handle higher living costs while staying current on debt payments. That concern tends to punish companies tied directly to discretionary spending and lending, even when their operating performance is solid.
Affirm’s recent results are a good example of that disconnect. The company posted strong third-quarter fiscal 2026 revenue growth and delivered another earnings beat, yet the stock still weakened after the report. That reaction suggests the market is not questioning what Affirm has done, but what the environment could look like over the next few quarters. In a risk-sensitive space like BNPL, investor confidence can shift quickly, and good numbers are not always enough to drive shares higher.
Competition is another factor weighing on sentiment. The BNPL market has become increasingly crowded, with Klarna and other fintech platforms fighting aggressively for market share. Investors have also been reminded how fragile partnerships can be. Walmart’s decision last year to swap out Affirm and make Klarna its exclusive BNPL provider was a notable blow.
Balance-sheet concerns have added another layer of pressure. Affirm’s funding debt ended the fiscal third quarter at $2.4 billion, up from $1.6 billion at the end of fiscal 2025. Its total debt-to-capital ratio sits at 67.7%, far above the industry average of 21.3%. PayPal, by comparison, stands at 32%.
Taken together, inflation fears, credit worries, competition and leverage concerns have dragged the stock lower even as demand for installment payments remains structurally strong. The pullback has been sharp enough that Affirm now trades roughly 34.7% below its 52-week high of $100.
For investors watching from the sidelines, that kind of discount often sparks a new question: Is the selloff overdone?
AFRM’s Growth Engine is Still Running
Despite the market’s caution, Affirm continues to build a strong long-term foundation. The company is expanding through partnerships, product innovation and a steadily growing user base. That broader reach should increase its addressable market over time and reduce dependence on any single channel.
Momentum in user activity remains one of the clearest positives. Affirm ended the fiscal third quarter with 26.8 million active consumers, a 22% increase from the prior year. Adoption is also translating into more frequent usage, as the platform becomes more integrated into everyday categories like groceries, fuel, travel, and subscription spending.
The company posted a 45% year-over-year increase in transactions to 45.3 million in the latest quarter. Repeat activity represented roughly 96% of total transactions, a strong signal that consumers are not just trying the service but sticking with it. On the merchant side, Affirm continues to scale. Active merchants climbed 44% year over year to 515,000 as of March 31, 2026, reflecting continued demand for flexible payment options at checkout.
Affirm’s newer initiatives also look increasingly meaningful. The Affirm Card, digital wallet integrations, agentic commerce efforts, and the newly launched Affirm Edge are emerging as important growth levers. Active cardholders jumped to 4.4 million in the fiscal third quarter, supported by Affirm’s cash-flow underwriting model, which evaluates real-time spending and deposit behavior rather than leaning only on traditional credit scores. The company also expanded its partnership with Google, integrating its BNPL offering into Google Search, AI Mode, and the Gemini app through Google Pay, which could support long-term volume growth.
Operationally, Affirm’s core business remains strong. Gross Merchandise Volume (GMV) rose 35% year over year to $11.6 billion in the fiscal third quarter. For fiscal 2026, the company expects GMV in the $49.265-$49.565 billion range. Management has also set a medium-term target of $100 billion in annual GMV, aiming for at least 25% annual GMV growth to reach that milestone.
Earnings Estimates for AFRM
The Zacks Consensus Estimate for fiscal 2026 earnings of $1.17 per share indicates a 680% year-over-year surge, while the estimate for fiscal 2027 earnings implies further growth of 46.6%. Moreover, the consensus mark for fiscal 2026 and 2027 revenues suggests 29.8% and 25.2% year-over-year growth, respectively.
It has delivered solid financial results lately, beating earnings estimates in each of the trailing four quarters, the average surprise being 74.9%.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Affirm is not priced like a bargain. The stock trades at 4.27X forward 12-month sales, slightly below its three-year median of 4.35X but above the industry average of 3.72X. PayPal and Klarna trade far lower, at 1.11X and 1.18X forward sales, respectively.
Even so, the pullback has made valuation easier to defend than it was near the highs. Affirm also trades below the average analyst price target of $84.41, implying upside of about 31.1%. The target range is wide, from $68 to $100, reflecting different risk views, but the overall tone remains constructive.
Final Words
Affirm’s stock has lagged this year as inflation concerns, credit risk fears, rising competition, and elevated leverage pressured sentiment across the BNPL space. However, the company continues to deliver strong operating momentum, backed by rapid growth in active consumers, transactions, and merchant adoption. Expansion through products like the Affirm Card and deeper partnerships such as Google Pay also support long-term upside. While valuation remains above peers, improving earnings trends keep the outlook balanced. Affirm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Affirm Slides 12.3% YTD Despite Strong Growth: Buy the Dip or Wait?
Key Takeaways
Shares of Affirm Holdings, Inc. (AFRM - Free Report) have slipped 12.3% year to date, a clear underperformance versus the S&P 500’s 8.9% rise. Still, the drop looks less severe when viewed in the context of its peers. The broader industry is down 13.3%, while other major buy now, pay later (BNPL) players have been hit harder. PayPal Holdings, Inc. (PYPL - Free Report) has declined 25% and Klarna Group plc (KLAR - Free Report) has plunged 47.7% over the same stretch.
Price Performance – AFRM, PYPL, KLAR, Industry & S&P 500
A major overhang has been persistent inflation anxiety. Geopolitical disruptions and uneven economic signals have kept markets focused on one key risk: whether consumers can continue to handle higher living costs while staying current on debt payments. That concern tends to punish companies tied directly to discretionary spending and lending, even when their operating performance is solid.
Affirm’s recent results are a good example of that disconnect. The company posted strong third-quarter fiscal 2026 revenue growth and delivered another earnings beat, yet the stock still weakened after the report. That reaction suggests the market is not questioning what Affirm has done, but what the environment could look like over the next few quarters. In a risk-sensitive space like BNPL, investor confidence can shift quickly, and good numbers are not always enough to drive shares higher.
Competition is another factor weighing on sentiment. The BNPL market has become increasingly crowded, with Klarna and other fintech platforms fighting aggressively for market share. Investors have also been reminded how fragile partnerships can be. Walmart’s decision last year to swap out Affirm and make Klarna its exclusive BNPL provider was a notable blow.
Balance-sheet concerns have added another layer of pressure. Affirm’s funding debt ended the fiscal third quarter at $2.4 billion, up from $1.6 billion at the end of fiscal 2025. Its total debt-to-capital ratio sits at 67.7%, far above the industry average of 21.3%. PayPal, by comparison, stands at 32%.
Taken together, inflation fears, credit worries, competition and leverage concerns have dragged the stock lower even as demand for installment payments remains structurally strong. The pullback has been sharp enough that Affirm now trades roughly 34.7% below its 52-week high of $100.
For investors watching from the sidelines, that kind of discount often sparks a new question: Is the selloff overdone?
AFRM’s Growth Engine is Still Running
Despite the market’s caution, Affirm continues to build a strong long-term foundation. The company is expanding through partnerships, product innovation and a steadily growing user base. That broader reach should increase its addressable market over time and reduce dependence on any single channel.
Momentum in user activity remains one of the clearest positives. Affirm ended the fiscal third quarter with 26.8 million active consumers, a 22% increase from the prior year. Adoption is also translating into more frequent usage, as the platform becomes more integrated into everyday categories like groceries, fuel, travel, and subscription spending.
The company posted a 45% year-over-year increase in transactions to 45.3 million in the latest quarter. Repeat activity represented roughly 96% of total transactions, a strong signal that consumers are not just trying the service but sticking with it. On the merchant side, Affirm continues to scale. Active merchants climbed 44% year over year to 515,000 as of March 31, 2026, reflecting continued demand for flexible payment options at checkout.
Affirm’s newer initiatives also look increasingly meaningful. The Affirm Card, digital wallet integrations, agentic commerce efforts, and the newly launched Affirm Edge are emerging as important growth levers. Active cardholders jumped to 4.4 million in the fiscal third quarter, supported by Affirm’s cash-flow underwriting model, which evaluates real-time spending and deposit behavior rather than leaning only on traditional credit scores. The company also expanded its partnership with Google, integrating its BNPL offering into Google Search, AI Mode, and the Gemini app through Google Pay, which could support long-term volume growth.
Operationally, Affirm’s core business remains strong. Gross Merchandise Volume (GMV) rose 35% year over year to $11.6 billion in the fiscal third quarter. For fiscal 2026, the company expects GMV in the $49.265-$49.565 billion range. Management has also set a medium-term target of $100 billion in annual GMV, aiming for at least 25% annual GMV growth to reach that milestone.
Earnings Estimates for AFRM
The Zacks Consensus Estimate for fiscal 2026 earnings of $1.17 per share indicates a 680% year-over-year surge, while the estimate for fiscal 2027 earnings implies further growth of 46.6%. Moreover, the consensus mark for fiscal 2026 and 2027 revenues suggests 29.8% and 25.2% year-over-year growth, respectively.
It has delivered solid financial results lately, beating earnings estimates in each of the trailing four quarters, the average surprise being 74.9%.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote
AFRM’s Valuation
Affirm is not priced like a bargain. The stock trades at 4.27X forward 12-month sales, slightly below its three-year median of 4.35X but above the industry average of 3.72X. PayPal and Klarna trade far lower, at 1.11X and 1.18X forward sales, respectively.
Even so, the pullback has made valuation easier to defend than it was near the highs. Affirm also trades below the average analyst price target of $84.41, implying upside of about 31.1%. The target range is wide, from $68 to $100, reflecting different risk views, but the overall tone remains constructive.
Final Words
Affirm’s stock has lagged this year as inflation concerns, credit risk fears, rising competition, and elevated leverage pressured sentiment across the BNPL space. However, the company continues to deliver strong operating momentum, backed by rapid growth in active consumers, transactions, and merchant adoption. Expansion through products like the Affirm Card and deeper partnerships such as Google Pay also support long-term upside. While valuation remains above peers, improving earnings trends keep the outlook balanced. Affirm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.