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Affirm (AFRM.US) surges 32% after earnings, best single-day gain in three years

AInvestThursday, Aug 29, 2024 8:40 pm ET
1min read

Affirm Holdings (AFRM.US) shares rose 31.92% on Thursday, the biggest single-day gain in nearly three years and the third biggest since its 2021 IPO, after the company reported better-than-expected fourth-quarter results.

The company's Q4 revenue rose 48% year over year to $659 million, topping analysts' estimates of $604 million; its net loss narrowed to $45.1 million from $206 million a year earlier; and its adjusted loss per share was $0.14, topping analysts' estimates of $0.51.

Affirm expects its first-quarter revenue in fiscal 2025 to be between $640 million and $670 million, topping analysts' estimates of $625 million.

Affirm CEO Max Levchin said the company set a new target to achieve GAAP operating profit before the fourth quarter of fiscal 2025.

Analysts at Mizuho said on Thursday that it was Affirm's "killer quarter" and that "achieving positive GAAP operating profit" would be "a significant milestone."

Despite the big rebound on Thursday, Affirm's shares have fallen about 15% this year, while the Nasdaq has risen 19%. But Affirm has been on a roll lately, up 47% in August. Fed Chairman Powell suggested last Friday that interest rates could be cut as early as September.

Analysts at Bank of America said last month that a rate cut would benefit Affirm's funding costs and loan sale gains. The company raised the annual interest rate limit on loans to its merchants from 30% to 36%, analysts said, which "should continue to drive yield and gross merchandise volume growth."

Mizuho expects Affirm's potential market to grow by $12 billion later this year once a new partnership with Apple Pay is reached.

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