Affirm (AFRM) Declines 15.3% Despite WooCommerce Alliance

·3-min read

Affirm Holdings, Inc. AFRM recently announced the expansion of its partnership with WooCommerce, a leading open-source e-commerce platform, built on WordPress and owned by Automattic. The move is expected to enable WooCommerce to provide its merchants with the buy now, pay later (BNPL) option through AFRM.

The deal will likely help AFRM offer its products to 3.7 million WooCommerce merchants. In the United States, these clients can now provide their customers with Affirm’s BNPL solutions at checkout. The merchants in Canada can use AFRM’s PayBright to deliver their customers with similar payment options. AFRM’s wide range of BNPL payment choices includes split payments, interest-free payments, etc. The partnership extension opens up future expansion possibilities in other locations as well.

Shares of Affirm declined 15.3% yesterday (Tuesday May 24). The effect of the partnership expansion on share price might have been offset by the growing concerns in the market. The stock witnessed a few ups and downs on the bourses in the last few weeks. Thanks to a favorable outlook, impressive earnings figures and management’s optimism, AFRM’s shares jumped last week. Growth in travel, ticketing, general merchandise, active merchants and consumers were boosting its performance.

Investors were also observing its path to profitability. At the Barclays 2022 Virtual Emerging Payments and FinTech Forum, CFO Michael Linford reiterated Affirm’s target of achieving sustainable profitability by mid-2023. However, the growing concerns in the market can be overpowering. The latest deal comes at a time when investors are concerned with the rising inflation and interest rate hikes by the Fed. Therefore, AFRM can face issues regarding funding in the capital markets.

As the interest rate is anticipated to witness aggressive spikes over the next few quarters (to tackle inflation), Affirm’s customers might face a hard time repaying their loans, thereby running the entity into greater losses. This can hinder AFRM’s advancement to profitability. Such apprehensions are keeping investors on tenterhooks.

One-Year Price Performance

Over the past year, shares of Affirm have declined 63.5% compared with the 25% fall of the industry it belongs to.

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Zacks Rank & Key Picks

Affirm currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the Business Services space are Barrett Business Services, Inc. BBSI, MarketWise, Inc. MKTW and Automatic Data Processing, Inc. ADP, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Barrett Business Services’ bottom line for 2022 is expected to jump 21.4% from the year-ago reading. The stock has witnessed two upward estimate revisions in the past 30 days against none in the opposite direction. BBSI's earnings beat estimates in three of the last four quarters and met the mark once, the average surprise being 51.6%.

MarketWise’s bottom line for the current quarter is likely to surge 100.5% from the year-ago reported figure. Baltimore, MD-based MKTW provides financial tools, education, research and other products for different markets. The Zacks Consensus Estimate for MKTW’s current-quarter revenues stands at $135.3 million.

The consensus mark for Automatic Data Processing’s 2022 earnings is pegged at $6.97 per share, indicating a 15.8% increase from the year-earlier reported figure. ADP’s earnings beat estimates in each of the last four quarters, the average being 6.2%.

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