AFRM Plummets 7% as Short-Sellers Pounce on Earnings Volatility

Summary
• Affirm Holdings (AFRM) trades at $65.87, down 7.05% from its $70.86 previous close
• Intraday range spans $65.70 to $70.36 amid $2.01M turnover
• Analysts split between 'Strong Buy' and 'Hold' as earnings beat clashes with macro concerns

Today’s 7% plunge in Affirm Holdings reflects a volatile clash between bullish earnings results and bearish macroeconomic skepticism. Despite a 33.6% revenue surge and a $0.23 EPS beat, short-sellers capitalized on mixed analyst signals and insider selling. The stock’s 52-week range of $30.90–$100.00 highlights its extreme volatility, with technical indicators pointing to a critical juncture.

Earnings Beat Ignites Short-Seller Frenzy as Analysts Clash on AFRM's Outlook
Affirm’s $0.23 EPS beat and $933M revenue surge initially buoyed optimism, but the rally collapsed under pressure from conflicting analyst ratings and insider selling. Truist cut its price target to $85 from $90, while Zacks downgraded to 'Hold'. Meanwhile, CEO Max Levchin and CFO Robert O’Hare sold 651,713 and 8,189 shares respectively, signaling internal caution. The stock’s 3.57% intraday gain earlier in the week contrasted sharply with today’s 7% drop, exposing fragile conviction in its BNPL (buy-now-pay-later) model amid rising macroeconomic uncertainty.

Consumer Finance Sector Splits as AFRM Tumbles Amid BNPL Uncertainty
The Consumer Finance sector remains polarized, with Klarna (KLAR) rising 1.68% as the sector leader. While Affirm’s BNPL model faces scrutiny over delinquency risks, Klarna’s scale and diversified partnerships (e.g., Amazon) offer a contrast. Analysts note Affirm’s 7% drop aligns with broader BNPL sector volatility, but Klarna’s resilience suggests structural advantages in market share and underwriting rigor.

Options Playbook: AFRM20251219P65 and AFRM20251219C67 Lead the Bearish Charge
• 200-day MA: $64.49 (below current price) • RSI: 62.33 (neutral) • MACD: -0.83 (bearish divergence) • Bollinger Bands: $61.84–$75.56 (wide range)

AFRM’s technicals suggest a critical test of $65.70 (intraday low) and $68.70 (20-day MA). Short-term bearish momentum is reinforced by high implied volatility (IV) and aggressive short positions. For options, AFRM20251219P65 (put) and AFRM20251219C67 (call) stand out:

• AFRM20251219P65 (Put): Strike $65, Expiry 12/19, IV 65.08%, Leverage 34.90%, Delta -0.38, Theta -0.019, Gamma 0.056
- High leverage and moderate delta position this put to capitalize on a 5% downside (projected price $62.57) with max payoff $2.43
• AFRM20251219C67 (Call): Strike $67, Expiry 12/19, IV 58.87%, Leverage 55.08%, Delta 0.32, Theta -0.214, Gamma 0.058
- Aggressive call with high gamma for volatility plays; 5% downside scenario yields $0.00 payoff but retains value if AFRM rebounds

Aggressive bears should target AFRM20251219P65 for a 5% downside bet, while bulls may consider AFRM20251219C67 for a volatility breakout above $68.70.

Backtest Affirm Holdings Stock Performance
The backtest of AFRM's performance after a -7% intraday plunge from 2022 to now shows mixed results. While the stock experienced a maximum return of 13.74% over 30 days, the win rates for 3-day, 10-day, and 30-day periods are below 55%, indicating a higher probability of negative returns in the short term. The average returns over 3, 10, and 30 days are 0.90%, 2.50%, and 6.74%, respectively, suggesting that while the stock has recovered from the plunge, the overall returns have been modest.

AFRM at Crossroads: Short-Term Bearish but Long-Term Buy for Resilient BNPL Players
Affirm’s 7% drop underscores near-term fragility but highlights its long-term potential as a BNPL innovator. Key levels to watch: $65.70 (support) and $68.70 (resistance). While short-term bearish momentum dominates, the sector’s 'Moderate Buy' rating and $86.57 average price target suggest resilience. Investors should monitor Klarna’s 1.68% gain for sector sentiment cues. For now, AFRM20251219P65 offers a high-leverage bearish play if $65.70 breaks.