Max Levchin, Co-Founder of PayPal and CEO of Financial Technology Company Affirm, arrives at Sun Valley Resort for the annual Allen & Company Sun Valley Conference in Sun Valley, Idaho.
Drew Ander | Getty Images
positive Shares plummeted on Friday after the fintech company issued weak forecasts, with investors questioning plans to grow on CEO Max Levchin’s 0% loan.
Buy now and later lenders said the quarter would range from $815 million to $845 million. According to LSEG, the midpoint of the range was not close to the average analyst estimate of $841 million.
Levchin, who founded the company in 2012, is looking to strengthen its growth with a 0% loan. This is a strategy that brings consumers into the door and transforms them into potentially long-time customers. Levchin told CNBC’s “Scoobox” that it’s a way to build customer loyalty, even if it means sacrificeing today’s margins.
“We help people realize that we don’t pay interest, turn our interest and don’t pay too much interest,” he said. “We share it through credit cards.”
These loans currently account for 13% of AFFIRM’s total merchandise volume (GMV), with 80% coming from Prime and Super Prime customers. Affirm’s core business includes issuing installment loans for sale to consumers who purchase items such as apparel, electronics, and sports goods.
GMV has broken through analyst estimates, but AFFIRM’s revenue reduction transaction costs (RLTC) missed street expectations, partly due to a surge in 0% APR loans. For the quarter, the company beat revenues and brought in inline revenues to estimates.
Lebutin said consumers continue to spend despite economic uncertainty, and positive credit performance remains “solid” and “consistent.”
“People are stressed about the economy, but they’re shopping, they’re shopping, they pay their bills, and at least they’re paying their bills back on time,” he said.
On Friday’s slide, Affirm stocks fell about 22% per year, while Nasdaq fell about 7%.
Some analysts remain bullish. Susquehanna, Bank of Americaand TD Cowen all upgraded their stock or rising price targets as they are considered growth potential.
Goldman Sachs It maintains its purchase rating in affirmation, calling it “a strong category leader in BNPL and stock profit and legacy credit provider.”
Barclayswhich corresponds to a buy rating that calls this quarter a “solid printing” despite high investors’ expectations. The company warned that the stock could see short-term misperforming, but warned that it was bullish with new partnerships, as in the recent agreement. Costco.
Leftin emphasized the importance of playing long games.
“We needed a universe like the universe to understand what consumers, merchants and what we are and how different and important it is to actually work,” he told CNBC.
Watch: Make sure Holdings falls at least 10% despite a surprise beat
Source link
