Consumer finance companies have been ravished by the rapidly rising interest rate environment, and the trend showed no signs of letting up for the buy now, pay later (BNPL) company Affirm (NASDAQ: AFRM) .
Affirm was a big winner in 2021 when tech stocks were all the rage and ascending to higher valuations every day. But over the last year, Affirm's stock is down 67% as the BNPL space has come under scrutiny and soaring interest rates have really made Affirm's business model difficult to operate. Let me explain.
Affirm extends credit to consumers who put zero money down and then pay off the purchase in multiple installment payments. Some of Affirm's loans carry no interest, while others carry as much as a 36% annual percentage rate.
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Affirm Has Been Another Casualty of the Rapidly Rising Interest Rate Environment