Affirm (AFRM) A Big Pre-Market Mover As Earnings Call Highlights Future Growth Strategies

Affirm Holdings stock (NASDAQ: AFRM) is a big pre-market gainer, up more than 17% as earnings came in above estimates. This extends the mini rally seen in AFRM's stock price over the past month, where a further 17.6% has been added.

The financial results for the quarter offered up a beat on both EPS and revenue, extending the run of consecutive beats to a complete year. Despite the fact that Affirm has made a habit recently of outperforming expectations, this quarter delivered the largest percentage beat, with EPS coming in almost 70% above consensus (-$0.14 against -$0.47) as revenues of $659 million also offered up a win against the $605 million expected.

During the call, CEO Max Levchin and CFO Michael Linford disclosed pivotal aspects of its growth strategy and operational highlights.

The firm recognized the importance of new initiatives such as B2B and wallet partnerships, which it views as crucial to significantly altering its trajectory. With the fintech landscape becoming more competitive, these steps appear to be key in distinguishing Affirm from its competitors.

Furthermore, the company is anticipating a positive shift in the RLTC percent of GMV by 10 basis points into 2025, attributed to their strong position in capital markets. This projection indicates a confident capital strategy and might signal robust financial health moving forward.

An interesting development for Affirm has been the validation of the Buy Now Pay Later (BNPL) sector through Apple Pay Later’s market entry. The Affirm-Apple partnership is deemed as a significant advancement, and it stands as a testament to the market’s recognition of BNPL’s relevance in contemporary commerce.

Affirm's plans to expand margins while concurrently investing in growth opportunities in 2025 illustrate a dual focus on profitability and market expansion. A particular strength shines through in their increased engagement with repeat users and transactions, which the company identifies as an area ripe with potential.

Addressing interest rates, Affirm pointed out that lower rates would not only improve approval rates for their services but also fuel customer activity. In an interest-sensitive market, this awareness could help Affirm to adjust its services to better cater to its customer base’s financial flexibility.

Analysts continue to be very split on Affirm, with targets ranging from a low of $20, to a high of $65. Whilst this cannot be taken as a constant, given the very nature of shifting targets, the upside range offers significant potential upside should the bulls be close to the mark.

Another earnings beat is clearly being well received, but whether Affirm can continue this run will likely have a big impact on whether the stock can break the midpoint of the 52 week range, and try to return to positive territory through 2024.