Key Stats for AFRM Stock
- Today’s Price Change: -10%
- Current Share Price: $49
- 52-Week High: $82
- Analysts’ Price Target: $68
What Happened?
Affirm stock (AFRM) is down nearly 10% after the company issued revenue guidance for the current quarter that fell short of analyst expectations, despite reporting better-than-expected profit for the third fiscal quarter.
For the quarter ended March 31, Affirm reported earnings of $0.01 per share, outperforming analysts’ consensus estimate of a loss of $0.02.
Revenue came in at $783 million, matching expectations and representing a 36% increase from $576 million a year ago. Gross merchandise volume (GMV), a key metric tracking the total value of transactions, rose 36% year-over-year to $8.6 billion, surpassing the $8.2 billion analyst estimate.
The company demonstrated strong operational metrics, with revenue less transaction costs (RLTC) margin at 4.1%, slightly above Affirm’s long-term target range of 3% to 4%.
Adjusted operating margins were 22%, better than the 21.6% consensus estimate. Affirm reported net income of $2.8 million, which was a significant improvement from the loss of $133.9 million ($0.43 per share) in the year-ago quarter.
However, investors focused on Affirm’s fourth-quarter revenue guidance of $815-845 million, with the $830 million midpoint falling below the $841 million analyst consensus.
Affirm did provide better-than-expected GMV guidance of $9.4-9.7 billion for Q4, above the $9.2 billion analyst forecast.
See Affirm’s full Q1 earnings transcript (It’s free) >>>
What the Market Is Telling Us
The market’s negative reaction to AFRM stock earnings report reflects concerns about future revenue growth despite improving profitability and transaction volume.
As a provider of consumer-focused installment loans, Affirm’s business is closely tied to overall economic health and consumer spending patterns, which have shown signs of pressure in specific segments.
Recent reports indicate that lower-income consumers are pulling back on discretionary spending to focus on essentials. However, Chief Financial Officer Rob O’Hare stated in an interview that the company hasn’t “seen any signs of stress on the consumer side” and that “credit outcomes are very in line with expectations.”
The U.S. economy contracted in the first three months of 2025, partly due to an import surge as companies and consumers rushed to get ahead of President Trump’s tariffs implemented in early April.
Despite these concerns, the Affirm stock report included several positive developments. The company reiterated its commitment to achieving GAAP profitability by the end of its fiscal fourth quarter in 2025.
Its active consumer base increased to 22 million, including 2 million new users. The Affirm Card, a key growth initiative, saw GMV rise 115% from a year earlier, with the number of active cardholders more than doubling.
Affirm’s partnerships with major retailers continue to drive momentum, with Apple, Amazon, and Shopify serving as important transaction channels.
The quarter also saw a 44% year-over-year increase in 0% interest loans, where merchants subsidize borrowing costs to drive sales.
CEO Max Levchin highlighted that these promotional offers help build a pipeline of higher-value customers who become “prime candidates for the Affirm Card,” boosting lifetime value.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
