Affirm, A BNPL Lender, Sees Its Shares Drop Following A Bleak Full-Year Revenue Forecast

The stocks of Affirm Holdings Inc., the buy-now-pay-later lender, were hit following the firm predicting its revenues for the full year of 2022 well below the expectations of Wall Street. There was an 11 per cent drop in the stocks of the company in morning trading on Friday, highlighting the wider decline in the fortunes of the once burgeoning fintech sector.

The company’s market cap has been reduced by billions as a result of rising rates, geopolitical unrest, and a widespread sell-off in high-growth technology stocks. Shares have fallen nearly 70 per cent so far this year.

“In light of the uncertain macroeconomic backdrop, we are approaching our next fiscal year prudently,” said Chief Financial Officer Michael Linford.

According to Refinitiv data, Affirm stated on Thursday that it anticipates full-year 2023 revenue to be between $1.63 billion and $1.73 billion, less than estimates of $1.9 billion.

“The company’s guidance implies revenue growth slowing to 37% from 87% in FY23 due to combination of tough comparisons and tighter underwriting standards,” Kevin Barker, managing director at Piper Sandler, covering consumer and mortgage finance firms, told Reuters.

The fintech is also one of the top trending tickers on the StockTwits forum for retail investors on Friday, where message volumes on the stock have increased by over 200 per cent.

Consumer finance companies have also suffered as a result of hot inflation as rising prices have reduced purchasing power and forced Americans, particularly those in lower income brackets, to tighten their budgets.

According to the company, first-quarter revenue will be between $345 million and $365 million, which is less than analysts’ forecast of $386 million.

“There is no competitive moat for this business and Affirm’s earnings results proved it. The pie might grow, but the number of players competing for slices has too,” said Thomas Hayes, chairman and managing member at Great Hill Capital.

In comparison to its competitors Block Inc. and PayPal Holdings Inc., Affirm is moderately valued and trading at a premium to its net worth.

(Adapted from Reuters.com)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s