Is Affirm's Share Price Justified Amid New Partnerships and Strong Short-Term Momentum?

Affirm Holdings (AFRM) has become a lightning rod for debate in the investment community. On one hand, its recent partnerships with industry giants like Worldpay, Wayfair, and FreshBooks have fueled a 59.4% annual return, while analysts project a fair value of $96.31-well above its current price of $75.92, according to an InsiderMonkey article. On the other, valuation models like Excess Returns suggest the stock is overvalued by 185%, and its price-to-sales (P/S) ratio of 7.0x dwarfs the industry average of 2.4x, per a Nasdaq article. For investors, the question is clear: Is Affirm a speculative frenzy or a legitimate long-term opportunity?

Strategic Partnerships and Market Expansion

Affirm's Q3 2025 partnerships have expanded its buy-now-pay-later (BNPL) footprint into software and retail ecosystems. Collaborations with companies like Fanatics and FreshBooks signal a shift toward embedding BNPL into everyday transactions, from e-commerce to accounting software, as noted in that InsiderMonkey article. These moves align with broader trends in the BNPL sector, particularly in India and Latin America, where the market is projected to grow by 13.4% and 27.0% in 2025, respectively, according to an India BNPL report and a Latin America BNPL report.

However, the company's success hinges on its ability to convert these partnerships into sustainable revenue. While Affirm's gross merchandise value (GMV) growth is robust, its profit margins remain thin compared to peers. Analysts caution that competition from Klarna and others could erode margins unless Affirm's scale translates into pricing power, a concern also raised in the Latin America BNPL report.

Valuation Realism vs. Retail Hype

The stock's valuation metrics tell a conflicting story. A P/S ratio of 7.0x suggests investors are paying a premium for Affirm's growth potential, but this metric ignores profitability. Meanwhile, the Excess Returns model-a framework that accounts for risk-adjusted returns-argues the stock is overvalued by 185% (the Nasdaq piece covers this divergence). This divergence reflects a broader tension between speculative retail-driven momentum and traditional value investing.

Retail investor sentiment, amplified by Simply Wall St, further muddies the waters. Community-driven fair value estimates range from $64 to $115, with optimists citing Affirm's product innovation and skeptics highlighting its lack of profitability. Institutional investors, however, have shown more discipline: The Public Employees Retirement System of Ohio increased its stake by 4.4% in Q2 2025, now holding $5.76 million in AFRM shares, according to a MarketBeat filing.

Global BNPL Trends and Competitive Pressures

Affirm's long-term prospects are intertwined with the BNPL sector's global expansion. In India, where the market is expected to reach $21.95 billion in 2025, players like Amazon Pay Later are leveraging e-commerce dominance to drive adoption (see the India BNPL report). Similarly, Latin America's $16.2 billion BNPL market is being shaped by fintech innovators like MercadoPago and Nubank (refer to the Latin America BNPL report). While Affirm's U.S.-centric model gives it a first-mover advantage, it risks being outpaced by regional players better attuned to local consumer behavior.

The Case for Caution

Despite the bullish narrative, Affirm's valuation remains precarious. A 7.0x P/S ratio implies investors expect revenue growth to outpace earnings, a bet that may not pay off if margins stagnate. Moreover, the recent 7.4% monthly drop in AFRM's share price underscores the volatility of retail-driven momentum, a point noted by Simply Wall St. For value investors, the disconnect between Affirm's current price and its fundamentals-particularly its lack of profitability-raises red flags.

A Call to Action

For investors, the key is to balance optimism with pragmatism. Affirm's partnerships and market expansion justify a long-term bullish stance, but its valuation demands caution. Those who believe in the BNPL sector's potential should consider dollar-cost averaging into AFRM, while value-oriented investors may prefer to wait for a pullback to $70 or below. With seasonal retail tailwinds fading in Q4 2025, now is the time to act-before the market's next move is dictated by hype rather than fundamentals.