Affirm cautious as inflation saps buy-now, pay-later users

Aug 25, 2022, 3:38 PM | Updated: 3:47 pm

NEW YORK (AP) — Shares of buy-now, pay-later company Affirm, which grew rapidly in the past two years as American consumers increasingly tried online installment loans, fell sharply Thursday after the company gave a more cautious outlook for its current fiscal year.

The outlook came with the company’s report of a quarterly loss that was wider than what Wall Street expected.

High inflation has raised investor concern about borrowers’ ability to keep up with their monthly payments. Buy-now, pay-later companies are being closely watched because of how quickly they grew during the pandemic.

In its fiscal fourth-quarter earnings report, Affirm cited a small tick up in delinquencies during the year. In an interview with The Associated Press, founder and CEO Max Levchin said the company is seeing “some level of stress” in customers with the lowest credit profiles.

“We have taken a much more conservative posture,” he said. But he noted Affirm is looking for other ways to approve loans to borrowers, through tactics like higher down payments.

There is also increased competition in the buy-now, pay-later industry. Technology giant Apple plans to roll out its own service later this year.

That said, merchants are still signing up for Affirm and so are customers. The company effectively doubled the number of merchants who accept Affirm payments in the past year, and the average number of transactions per customer has grown from roughly two to three, a sign customers are not just signing up for the service once and leaving it.

Affirm said it expects revenue for its current fiscal year in the range of $1.63 billion to $1.73 billion, compared with the $1.9 billion in revenue that analysts were looking for, according to FactSet.

On a per-share basis, the San Francisco-based company said it had a loss of 65 cents in its fiscal fourth quarter that ended June 30.

Shares of Affirm Holdings Inc. have declined 69% since the beginning of the year.


This story was partially generated by Automated Insights using data from Zacks Investment Research. Access a Zacks stock report on AFRM at https://www.zacks.com/ap/AFRM.

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Affirm cautious as inflation saps buy-now, pay-later users