What Wall Street Analysts Think of Affirm's Stock Ahead of Earnings

Key Takeaways

• Affirm Holdings is set to report first-quarter earnings after the bell Thursday, with analysts expecting revenue to grow nearly 34% from last year's quarter.
• Analysts polled by Visible Alpha expects to see losses of 33 cents per diluted share.
• Deutsche Bank analysts see opportunity for customer growth as interest rates come down.

Affirm Holdings (AFRM) is set to report its fiscal first-quarter earnings after the market closes on Thursday, with analysts expecting the buy now, pay later (BNPL) firm to aggressively pursue new users as interest rates decline.

Wall Street expects Affirm to report revenue growing nearly 34% year-over-year to $663.9 million, according to consensus estimates from Visible Alpha. Analysts broadly expect the fintech firm to post a net loss of $107.5 million, or 33 cents per diluted share, according to Visible Alpha.

Deutsche Bank anticipates revenue of about $670 million, the high end of Affirm's guidance. Its analysts described falling interest rates as an opportunity for a company that has "deftly" handled credit. Affirm quickly adjusted its underwriting techniques and merchant fees when unemployment skyrocketed during the onset of COVID-19, the analysts said in an Oct. 28th note.

"With interest rates now coming down, [Affirm] gains the opportunity to approve more users as lower funding costs allow it to be more aggressive," they wrote.

Terms vary, but BNPL products tend to use short-term loans to break up a purchase into fixed installments, without interest. Fintech companies may charge merchants for facilitating BNPL deals with their customers, as well as fees to delinquent borrowers.

Affirm recently launched in the United Kingdom, and additional growth is expected domestically from Amazon.com (AMZN) and Shopify (SHOP) customers, the note said. The fintech company's new agreement with Apple (AAPL) may be less impactful since Apple Pay also works with competitors Klarna and Monzo Flex, the note said.

Affirm should be profitable on a GAAP basis in the final quarter of its fiscal year, which ends in late June, CEO Max Levchin said.

Affirm's shares jumped after the company reported fiscal fourth-quarter results earlier this year. The stock is down about 7% this year through Tuesday's close.

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