Current Status of AFRM Stock:
Rewritten Article:
Affirm Holdings (NASDAQ: AFRM), known for its buy now, pay later and point-of-sale payment solutions, blew past market expectations in Q2 of its fiscal 2025, reporting a revenue of $866 million and earnings of $0.23 per share. Analysts had predicted revenues of $807 million and losses of $0.15 per share. The impressive results led to a 22% surge in AFRM's stock price on February 7. On the other hand, BMY's stock didn't share the same fortune despite an earnings beat. Dive into Investing in Bristol Myers Squibb Stock: Is $57 the Right Price?
AFRM's impressive stock performance since the beginning of 2024, with returns of 53%, outshines the S&P 500 index, which has seen a 26% growth during the same period. The upward trend in AFRM's stock price has been propelled by an increase in gross merchandise volume.
For those seeking returns with a smoother ride, consider the High-Quality portfolio. This portfolio has consistently outperformed the S&P 500, achieving over 91% returns since its inception.
In Q2, Affirm's revenue of $866 million marked a remarkable 47% year-over-year growth, driven by booming performances across all business verticals. Affirm witnessed whopping increases in gain on sale of loans (138% y-o-y), network revenue (33% y-o-y), interest income (42% y-o-y), and servicing income (28% y-o-y). Affirm's key operating metrics, namely gross merchandise volume, surged 35% y-o-y to $10.1 billion, pointing towards improving monetization. Furthermore, the company reported a 19% rise in active consumers to 21 million and a 22% increase in transactions per active user.
Affirm reported earnings of $0.23 per share in Q2, contrasting with a loss per share of $0.54 in the previous year's quarter. Looking ahead, Affirm anticipates Q3 revenues to hover around the $770 million midpoint, aligning with estimates.
The recent surge in AFRM stock has been accompanied by high volatility. Conversely, the Trefis High-Quality Portfolio, comprising 30 stocks, has shown lesser volatility and outperformed the S&P 500 in the past four years. But why?
Several factors contribute to the portfolio's outperformance and lower volatility, such as its diversified holdings, focus on high-quality and short-term credits, inclusion of resilient securities, and investment in alternative assets and private investments. These strategies minimize volatility, maximize returns, and enable the portfolio to navigate market fluctuations successfully.
Given the current uncertain macroeconomic climate and potential market fluctuations, what's next for AFRM? Currently, AFRM stock trades at 8.5x trailing revenues, slightly below its 8.6x average P/S ratio over the previous two years. Based on Affirm's strong performance, a higher valuation multiple is justified. Applying a 10% premium P/S ratio at 9.5x, we derive a price target of $84, indicating a potential 12% upside.
To gain insight into how AFRM's peers fare, check out the Peer Comparisons. Dive into Investing with Trefis Market-Beating Portfolios. Discover further Price Estimates at Trefis.
Affirm's Q2 revenue of $866 million, driven by its buy now, pay later and point-of-sale solutions, led to a significant 22% increase in its valuation and a 'buy now pay later' stock surge. Investors considering a smoother return journey might consider Affirm Holdings' peer comparisons and Trefis' High-Quality portfolio, which has consistently outperformed the S&P 500, offering over 91% returns since its inception.