Affirm Stock Plummets as Klarna Snags Walmart BNPL Deal

BOOM! Affirm stock just took a nosedive as Walmart announced it's ditching Affirm for Klarna as its BNPL partner. This is a HUGE blow to Affirm, which has been riding high on the BNPL wave. But don't panic just yet, folks! Let's break down what this means for Affirm and how it can fight back.

First, let's talk about the ELEPHANT IN THE ROOM. Walmart is a retail giant, and its partnership with Affirm has been a major growth driver. In fiscal 2021 and 2022, Affirm's active merchants, active consumers, transactions per active consumer, and gross merchant volume (GMV) all soared. But with Walmart jumping ship to Klarna, Affirm is facing a MAJOR setback.



But here's the thing, folks: Affirm isn't going down without a fight. The company has been diversifying its merchant base and expanding into new markets. For instance, Affirm's integration with Shopify's e-commerce platform has helped it gain thousands of new merchants. And get this: travel tickets and general merchandise accounted for half of its GMV in the fourth quarter of 2024. That's some serious GROWTH, GROWTH, GROWTH!

Now, let's talk about the BIG PICTURE. Affirm's operating margin improved from negative 43.6% in fiscal 2021 to negative 26.5% in fiscal 2024. That's a HUGE improvement, and it shows that Affirm is becoming more efficient. But can it turn a profit? Affirm expects its operating margin to turn positive by the fourth quarter of fiscal 2025 and stay positive in the future. That's a BOLD prediction, but if Affirm can pull it off, its stock could ROCKET to the moon!

But here's the CATCH: the BNPL market is highly competitive, with players like Block's Afterpay and PayPal's Pay in 4 carving up the market. If Affirm's new partnership doesn't provide a significant competitive advantage, its stock could stagnate or even decline. So, what can Affirm do to regain market share?

1. Diversify Merchant Base: Affirm needs to keep expanding its partnerships with other e-commerce platforms and retailers. The more merchants it has, the more transactions it can process, and the more revenue it can generate.

2. Innovate Product Offerings: Affirm's Affirm Card, which merges a debit card with BNPL options, is a GENIUS move. But Affirm needs to keep innovating to stay ahead of the competition.

3. Leverage Data Analytics: Affirm needs to use data analytics to better understand consumer behavior and preferences. This can help it tailor its product offerings and marketing strategies to better meet consumer needs.

4. Expand into New Markets: Affirm needs to keep expanding into new markets to diversify its revenue streams. This can help it mitigate the loss of Walmart and other major partners.

5. Improve Operating Margin: Affirm needs to keep improving its operating margin by scaling up its business, trimming its workforce, and reining in its other expenses. This can help it become more competitive and regain market share.

So, folks, don't count Affirm out just yet. It's facing a MAJOR setback, but it has the tools to fight back and come out on top. Just remember: DON'T PANIC, STAY CALM, and KEEP YOUR EYE ON THE BALL. Affirm is a FIGHTER, and it's not going down without a fight. BOO-YAH!