AFRM - Affirm: Risk-Reward Is Attractive To Initiate A Position In The Stock

2024-04-06 07:24:41 ET

Summary

• Affirm exceeded revenue and earnings growth expectations in Q2 FY24, driven by strong growth in adding new merchants while deepening adoption of the Affirm Card among consumers.
• The company aims to reach $50B in GMV by FY28 through strategies such as deeper adoption of the Affirm Card, unlocking new merchants and segments and expanding internationally.
• Although Affirm faces risks from exposure to interest rates and a competitive landscape, I believe the stock is attractively priced to drive significant long-term returns.

Introduction & Investment Thesis

Affirm (NASDAQ: AFRM ) is a “buy now, pay later” (BNPL) platform that has severely underperformed the S&P 500 and Nasdaq 100 YTD. The company reported its Q2 FY24 earnings in February, where revenue and earnings beat expectations, growing 48% and 250% YoY, respectively, as it saw strong growth with small and medium-sized businesses as well as deepening adoption of its Affirm Card....

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