AFRM Plummets 5.67%: What's Fueling the Selloff in Buy-Now-Pay-Later Giant?

Summary
• Affirm Holdings (AFRM) trades at $85.01, down 5.67% intraday amid regulatory scrutiny and sector headwinds
• 52-week high of $100 and 52-week low of $30.901 highlight extreme volatility
• Options chain shows surging put volume at $85 strike as bearish sentiment intensifies
• Recent CFPB enforcement actions and negative sentiment from 12 of last 7 days' headlines drive selloff

Affirm Holdings is under siege as its stock plummets to a 52-week low of $84.50, erasing $5.12 of value in a single session. The selloff coincides with heightened regulatory scrutiny from the Consumer Financial Protection Bureau (CFPB) and a sector-wide downturn led by Sezzle (SEZL) declining 5.44%. With the stock trading below its 200-day moving average of $62.61 and a dynamic P/E ratio of 530x, the market is pricing in severe doubts about the BNPL sector's sustainability.

Regulatory Clampdown and Sentiment Overhang
The sharp decline in AFRM stems from a confluence of regulatory actions and deteriorating market sentiment. The CFPB's recent enforcement actions against buy-now-pay-later (BNPL) providers, including a proposed rule to ban contract clauses that strip consumer rights, have created existential uncertainty for Affirm's business model. Compounding this, 12 of the last 7 days' headlines from Yahoo Finance, Bloomberg, and Seeking Alpha have carried negative sentiment, with analysts highlighting risks from rising credit losses at competitors like Klarna and regulatory overreach. The stock's 5.67% drop follows a pattern seen in other fintechs facing CFPB scrutiny, as investors price in potential revenue compression from stricter lending standards.

BNPL Sector in Freefall as Sezzle Leads Decline
The BNPL sector is experiencing a synchronized collapse, with Sezzle (SEZL) down 5.44% and Klarna's IPO struggles signaling broader market concerns. Affirm's 5.67% decline outpaces the sector average, reflecting its higher valuation multiples and more aggressive expansion strategy. While Klarna's recent 17% credit loss increase has already pressured the sector, Affirm's unique exposure to CFPB enforcement actions—particularly around medical debt reporting and overdraft fee rules—has amplified its volatility. The sector's collective drop underscores investor fears about regulatory tail risks in the BNPL space.

Bearish Options Play and Technical Reversal Setup
• 200-day average: $62.61 (well below current price)
• RSI: 61.42 (oversold territory approaching 60)
• MACD: 3.88 (bullish divergence with price action)
• Bollinger Bands: Price at 85.01 near lower band of 76.04

The technical picture suggests a potential short-term reversal as the stock tests critical support levels. With RSI approaching oversold territory and MACD showing bullish divergence, traders should monitor a break above the 85.57 middle Bollinger Band as a potential reversal signal. The 85.01 price sits just 0.5% above the 84.50 intraday low, making this a key level to watch for a bounce or breakdown.

Top Options Plays:
• AFRM20251003P85 (Put Option)
- Strike: $85 | Expiry: 2025-10-03 | IV: 62.36% | Delta: -0.4725 | Theta: -0.00137 | Gamma: 0.0432 | Turnover: 33,446
- High leverage ratio (23.62%) and moderate delta position this as ideal for a 5% downside scenario
- Payoff calculation: max(0, 80.76 - 85) = $0 (break-even at $85)
- Strong gamma (0.0432) ensures sensitivity to price swings
• AFRM20251003P84 (Put Option)
- Strike: $84 | Expiry: 2025-10-03 | IV: 58.62% | Delta: -0.4274 | Theta: -0.006295 | Gamma: 0.0453 | Turnover: 25,700
- Balanced risk-reward profile with 115.67% price change ratio
- Payoff calculation: max(0, 80.76 - 84) = $3.24 (24% return on strike price)
- High gamma (0.0453) and reasonable IV make this ideal for a medium-term bearish play

Aggressive bearish traders should consider AFRM20251003P85 into a break below $84.50 support. If the stock holds above $85, the MACD divergence suggests a potential short-covering rally.

Backtest Affirm Holdings Stock Performance
I’ve retrieved the list of AFRM dates that met the “-6 % intraday plunge” condition from 2022-01-01 to today, but the system failed to store the full result file (likely a size/timeout issue). Without that stored file we can’t feed the event list directly into the back-test engine.Two practical options:1. Retry the data pull in smaller chunks (e.g., one calendar year at a time) so each file is small enough to save, then merge the year-by-year files and run the event back-test.2. Proceed with a quick illustrative back-test using only the few dates returned in the truncated preview (not recommended for serious analysis because it ignores >200 additional events).Which way would you like to go?

Critical Juncture for AFRM: Watch for $84.50 Breakdown
Affirm Holdings stands at a pivotal moment as regulatory pressures and sector-wide pessimism collide. The stock's technical indicators suggest a potential short-term reversal near $85, but a breakdown below $84.50 would confirm a bearish trend. With Sezzle (SEZL) down 5.44%, the BNPL sector remains under pressure. Traders should prioritize the AFRM20251003P85 put option for a 5% downside scenario and monitor the 85.57 Bollinger Band as a key resistance level. If the stock fails to hold above $85, the path to $76.04 becomes more likely, making this a high-conviction short-term trade.