Key Takeaways:
- Amazon Extension: 5-year partnership renewal through January 2031 secures critical merchant relationship.
- Price Projection: Based on current execution, AFRM stock could reach $88 by June 2028.
- Potential Gains: This target implies a total return of 46% from the current price of $60.
- Annual Return: Investors could see roughly 17% growth over the next 2.4 years.
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Affirm Holdings (AFRM) just extended its U.S. agreement with Amazon for five years while posting 40% GMV growth in its fiscal Q1 2026.
- The company added 500,000 new Affirm Card members during the quarter and expanded its zero-percent financing offerings through a major promotional event.
- CEO Max Levchin is executing an aggressive expansion strategy centered on direct-to-consumer products and zero-percent promotional financing.
- The company maintained RLTC (revenue less transaction costs) margins above 4% while expanding merchant partnerships with payment service providers such as Worldpay.
Despite strong momentum in card adoption and merchant integrations, Affirm stock trades at $60, offering upside for investors who recognize the company’s evolving position in buy-now-pay-later and its transformation into a broader consumer finance platform.
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What the Model Says for Affirm Stock
We analyzed Affirm’s evolution from a point-of-sale lender into a comprehensive consumer finance network with card products and direct consumer relationships.
Affirm is expanding beyond traditional installment lending.
- The Affirm Card now serves nearly 2 million active users, creating recurring engagement beyond one-time purchases.
- With zero-percent financing becoming a larger part of the mix, Affirm is attracting higher-credit-quality consumers while building promotional capabilities that drive incremental merchant value.
- The company has diversified its merchant base with no single partner creating outsized concentration risk.
- The Amazon renewal through 2031 provides stability while partnerships with Shopify, payment platforms, and direct merchant integrations create multiple growth channels.
Using a forecast of 25% annual revenue growth and an 11.6% operating margin, our model projects the stock price will rise to $88 in 2.4 years. This assumes an 18x price-to-earnings multiple.
That represents a compression of Affirm’s current P/E multiple to 27.8x over the past year. The lower multiple acknowledges the company’s path to sustained profitability and normalization of growth rates as the business scales.
The real value lies in expanding card adoption, maintaining momentum in zero-percent financing partnerships, and demonstrating operating leverage as the platform matures.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for AFRM stock:
1. Revenue Growth: 25%
Affirm’s growth centers on card adoption and zero-percent promotional financing.
- The company added 500,000 Affirm Card members in Q1, bringing the total to nearly 2 million active cards.
- Management emphasizes the card as a preferred engagement method, with cohorts showing improved spend capture over time.
- The recent “0% Days” promotional event demonstrated Affirm’s ability to drive incremental merchant value through targeted zero-percent offers.
Beyond cards, Affirm continues to expand its merchant relationships.
The Amazon extension through 2031 provides long-term visibility, while partnerships with payment service providers accelerate integration timelines. Management highlighted continued international expansion with Shopify in the UK.
2. Operating margins: 11.6%
Affirm is demonstrating improved operational efficiency as it scales.
The company raised full-year operating margin guidance to above 7.5%, up from prior guidance of above 6%.
This improvement reflects operating leverage from revenue growth rather than cost-cutting. With GMV growing 40% year over year and incremental revenue flowing to the bottom line, Affirm is proving the unit economics of its model.
Management maintains discipline around the 3-4% RLTC margin target, using excess margin to fuel growth through better merchant economics or expanded consumer reach.
This balanced approach prioritizes sustainable network expansion over short-term margin optimization.
3. Exit P/E Multiple: 18x
The market values Affirm at 18.9x current NTM earnings. We assume the P/E will hold near 18x over our forecast period.
The company’s transition toward profitability and demonstrated operating leverage support a reasonable earnings multiple.
However, competition in BNPL, questions around sustainable take rates, and execution risk on card adoption prevent a premium valuation.
As Affirm demonstrates consistent profitability growth and card engagement metrics improve, the market should maintain current valuation levels.
The company’s technology-driven underwriting and unique product capabilities provide defensibility that justifies a growth-oriented multiple.
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What Happens If Things Go Better or Worse?
Consumer lending faces credit cycle risks and competitive pressures. Here’s how Affirm stock might perform under different scenarios through June 2028:
- Low Case: If revenue growth slows to 20% and net income margins compress to 20.6%, investors could see a 51% total return (9.7% annually).
- Mid Case: With 22% growth and 23% margins, we expect a total return of 112% (18.5% annually).
- High Case: If card adoption accelerates and Affirm maintains 26% margins while growing at 25%, returns could hit 188% (27% annually).
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The range reflects execution on card growth, successful expansion of zero-percent financing programs, and the company’s ability to maintain RLTC margins as it scales.
In the low case, credit performance deteriorates, or competitive pressures force margin compression.
In the high case, card adoption exceeds expectations; zero-percent financing creates network effects among merchants; and operating leverage improves faster than anticipated.
How Much Upside Does Affirm Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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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!
