The Affirm stock price rocketed higher on Friday after the company published strong fourth-quarter results. The stock jumped to $111, which was the highest level since February, bringing its total market value to more than $26 billion.
Affirm earnings review
Affirm Holdings had a monster quarter and this trend could go on for a while. In a report on Thursday, the fintech company said that its revenue and gross merchandise value (GMV) jumped during the quarter. Precisely, the GMV rose to more than $2 billion while revenue soared by 71% to $262 million.
The GMV figure was notable since it was about $861 million in the first quarter of 2020. In the same period, the total number of customers rose from 2.8 million to more than 7.1 million while the number of merchants all rose.
The results show that Affirm’s business is doing well as the buy now, pay later (BNPL) business gains steam. In the past few months, we have seen activity in the industry jump. For example, this week, PayPal acquired Paidy, a leading Japanese BNPL brand.
And in August, one of the biggest deals announced this year was in the industry. Square, the company that owns Cash App announced that it was spending $29 billion to acquire Australia’s AfterPay. Another deal in the BNPL industry was the acquisition of Payflex by Zip. Payflex is a South African company with more than 135k.
At the same time, Apple is said to be considering launching a BNPL business to integrate it with its Apple Pay product. Similarly, PayPal is considering expanding these products through its super-app.
Meanwhile, Amazon, the biggest e-commerce company, has embedded Affirm in its platform. This could lead to more sales for Affirm considering that a large population in the United States shops in Amazon.
For starters, Affirm’s business model is relatively simple. The company partners with retailers and other sellers, who list it on their websites and retail outlets. When customers shop, they have the option to pay the funds in cash or use a credit card. They also have the option of using Affirm and pay in several instalments.
Unlike credit card companies, Affirm does not make money through interest rate payments. It makes money by charging a commission to the company. As a result, the transaction is usually mutually beneficial to both Affirm and the company. So, what next for the Affirm stock price?
Affirm stock price forecast
The four-hour chart shows that the Affirm stock price gapped up on Friday after the spectacular results. The stock managed to move above the 61.8% Fibonacci retracement level. It has also moved above the 25-day and 50-day moving averages. The other key resistance it moved above was $70.93, which was the highest level between June and August.
Therefore, in my view, it is just a matter of time before Affirm becomes the next big thing in fintech. Besides, it has a well-known brand that it could use as it mirrors the performance of Square.