Shares of Affirm experienced a surge on Friday following the company's release of financial results. This presentation of quarterly performance included both top and bottom lines that significantly exceeded expectations, and was followed by a positive outlook for the upcoming fiscal first quarter.
Shares of Affirm surged 26% in premarket trading on Friday following the release of its fiscal fourth-quarter results, which exceeded analyst estimates. Revenue for the recent quarter totaled $446 million, ahead of the $406 million predicted by Refinitiv analysts. The company also gave a strong outlook for the first quarter, suggesting it could reach between $430 million and $455 million in revenue, higher than the $430 million analysts had estimated.Affirm also released gross merchandise volume (GMV), a key industry metric, of $5.5 billion-- an increase of 25% year-over-year-- exceeding the $5.3 billion projected by StreetAccount analysts. This was accompanied by a net loss of $206 million, or 69 cents per share, compared to a $186.4 million net loss (65 cents per share) in the same quarter the previous year. The pandemic has benefited similar buy now, pay later services, such as Affirm, encouraging more online shopping. However, rising interest rates have presented a challenge to the company.Michael Linford, Affirm's CFO, stated that despite these difficulties, the company still delivered "good credit results, unit economics, and GMV growth," adding that Affirm can "continue to expand profitably even in a high interest rate environment."The resumption of student loan payments in October will be "a modest headwind" to Affirm's GMV by 2024, the company reported.Despite the macroeconomic uncertainties, experts have reacted positively to the results, with Deutsche Bank increasing their price target from $12 to $16 and reiterating their "hold" rating on the stock. This optimism was reflected in Affirm's midday price of more than $17 per share. The Deutsche Bank analysts highlighted the Affirm Card-- the company's debit card-- as a driver of potential upside. They wrote, "We see potential upside to numbers if the Affirm Card lives up to the lofty expectations mgmt. has set for it."
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