Why Affirm Stock Is Down By 10% Today

Affirm Stock Dives After Earnings Report Fails To Meet Analyst Expectations

Shares of Affirm gained strong downside momentum after the company released its quarterly results.

The Buy Now, Pay Later (BNPL) company reported revenue of $361 million and a loss of $0.57 per share, beating analyst estimates on revenue and missing them on earnings. In the current fiscal year, Affirm expect to report revenue of $1.29 billion – 1.31 billion.

Gross merchandise volume increased by 115% on a year-over-year basis, while the number of active consumers grew by 150%.

Yesterday, the company accidentally released some metrics during the trading session, and its shares spiked. However, the stock found itself under huge pressure after the full earnings report was released, and selling activity remains strong today.

What’s Next For Affirm Stock?

Analysts expect that Affirm will report a loss of $2.22 per share in the current fiscal year and a loss of $1.28 per share in the next fiscal year.

At a time when Treasury yields are rising fast and everyone talks about inflation, the market is especially sensitive to growth rates of loss-making companies.

Importantly, the market’s expectations may differ from analyst expectations, so beating analyst estimates may not be sufficient enough to push the stock higher.

Affirm stock made an attempt to settle above the $175 level roughly three months ago, and it has already lost about 70% of its value. However, it remains to be seen whether speculative traders will rush to buy Affirm stock after the strong pullback.

The market has started to price in aggressive rate hikes from the Fed. Shares of loss-making companies are especially sensitive to higher rates as their valuation is based on discounted cash flows. As rates increase, their valuation automatically moves lower. In addition, the market sentiment remains bearish towards such plays, so Affirm stock will have a good chance to develop additional downside momentum in case it manages to settle below the $50 level.

For a look at all of today’s economic events, check out our economic calendar.