Buy Now, Pay Later company Affirms shares drop after a disappointing performance in its fiscal fourth quarter.
As investors assess the Buy Now, Pay Later lender’s fiscal Q4 earnings, FY2023 projections, and conference call, Affirm Holdings (NASDAQ:AFRM) stock has fallen 10% in Friday premarket trade, but it has reduced its loss from an earlier loss of 14%.
Although its fiscal Q4 performance exceeded Wall Street forecasts, its sales guidance for the first quarter and fiscal year 2023 fell short of expectations.
The Peloton (PTON) stock will continue to be a drag on growth in H1H23, according to BofA Securities analyst Jason Kupferberg, who thinks investors “underestimated the effects of lapping the Amazon (AMZN) and Shopify (SHOP) collaborations.” Additionally, he mentioned that Affirm (AFRM) has a history of “leading fairly conservatively.” Buy is still the analyst’s recommended action.
David Chiaverini, a Wedbush analyst, maintains his Underperform rating on the company. The fiscal 2023 projection came in below our earlier estimates on practically all fronts, according to the major takeaway from Affirm’s (AFRM) earnings, he wrote in a note. As it transitions to more frequent purchases with larger enterprise partners, the company “continues to see a lower overall take rate, which we expect may continue to weigh profitability for the foreseeable future,” he continued.
John Hecht, an analyst with Jefferies, still rates the stock as Underperform. He wrote in a memo to clients that “Quarter downsides exceed the pros.” Despite the fact that growth and technology sources are stronger fundamental indicators, AFRM’s revenue beat appears to be correlated with financial elements like gain on sale and interest income. Its guidance was also less strong than anticipated, and “management’s tone reinforced caution.”
Mixed feelings about the stock
In spite of macroeconomic uncertainty, Morgan Stanley analyst James Faucette predicts that “investors are likely to remain cautious near-term on Affirm’s capacity to grow and maintain economics, especially given the increased deterioration of loan performance between July and August.”
Andrew Jeffrey, an analyst at Trust, reiterates his Buy recommendation and urges investors to take advantage of the stock’s weakness. “We see a limited downside, even though there is no near-term trigger, at least until Affirm (AFRM) reaches profitability,” he said. We assert that the company is a good acquisition target due to its top clients, tech integrations, underwriting, and customer/merchant growth.
Following weak Q1 and FY203 forecasts, Affirm’s (AFRM) stock fell in after-hours trading on Thursday.
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Author Jowi Kwasu 
