Affirm (AFRM) Shares Gain Ahead of Earnings as Investors Await Apple Partnership Impact
Shares of buy now, pay later (BNPL) company Affirm (AFRM) saw gains in today’s trading. Investors are eagerly awaiting the company’s Q4 earnings results, set to be released after market close on August 28. Analysts anticipate earnings per share to come in at -$0.48 on revenue of $605.4 million. This represents potential year-over-year increases of 30.43% and 35%, respectively, according to TipRanks data. While ideally, EPS growth should outpace revenue growth, Affirm has a history of beating earnings estimates for five consecutive quarters, making the potential for faster EPS growth a possibility.
Key Takeaways:
- Affirm’s Q4 earnings are expected on August 28.
- Analysts predict a loss of $0.48 per share on revenue of $605.4 million.
- Affirm has consistently exceeded earnings estimates in recent quarters.
- The company’s new partnership with Apple could be a major catalyst.
- Options traders anticipate a significant stock movement following the earnings report.
- Wall Street analysts hold a Moderate Buy consensus rating on AFRM stock.
The Apple Partnership: A Potential Catalyst for Growth?
Affirm’s recent partnership with Apple, which allows Apple Pay users to utilize Affirm’s BNPL service for Apple products, is viewed as a positive catalyst by bullish analysts. Some analysts believe that this partnership could lead to higher-than-expected GAAP profitability, potentially resulting in another earnings beat.
However, it’s important to consider the bearish arguments as well. A significant factor that could impact Affirm’s success is a potential slowdown in consumer spending. With the economy slowing and essential goods prices rising, consumers may cut back on discretionary purchases, which could negatively affect Affirm’s business.
Options Traders Anticipate a Big Move
Using TipRanks’ Options tool, we can see that options traders are expecting a large 15.38% move, or $5, from AFRM stock in either direction immediately after the earnings report. This expectation is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. Notably, AFRM stock has historically seen many moves exceeding the current expectation.
Is AFRM Stock a Buy, Sell, or Hold?
Wall Street analysts currently have a Moderate Buy consensus rating on AFRM stock, based on five Buys, three Holds, and one Sell assigned in the past three months. After an impressive 81% rally in its share price over the past year, the average AFRM price target of $41.50 per share suggests 27.65% upside potential. This optimistic outlook reflects the potential for growth driven by the Apple partnership and the continued adoption of BNPL services.
However, it’s crucial to remember that consumer spending sentiment remains a key factor in the overall performance of the BNPL industry. While Affirm’s partnership with Apple creates a significant opportunity, the company’s future success hinges on navigating the ongoing economic headwinds and delivering strong earnings results that meet or exceed expectations.
The BNPL Industry: Navigating a Complex Landscape
The BNPL industry has experienced rapid growth in recent years, driven by the increasing popularity of flexible payment options amongst consumers. However, this growth has also attracted regulatory scrutiny, with concerns raised about potential consumer debt risks and unfair lending practices.
As the BNPL industry continues to mature, it will be crucial for companies like Affirm to demonstrate responsible lending practices and build trust with both consumers and regulators. Affirm’s success hinges on its ability to navigate this complex landscape, manage growth effectively, and establish itself as a reliable and trustworthy provider of payment solutions.
Looking Ahead: Key Factors to Monitor
As investors analyze Affirm’s Q4 earnings report, there are several key factors to monitor closely:
- The impact of the Apple partnership on revenue and user growth.
- The company’s ability to manage consumer debt levels and maintain responsible lending practices.
- The overall macroeconomic environment and its potential impact on consumer spending.
- The company’s long-term strategy for expansion and diversification.
Affirm has positioned itself at the forefront of the BNPL industry, with a strong brand and a growing network of merchant partners. The company’s upcoming earnings report, and its ability to navigate the changing landscape, will provide key insights into its future prospects and potential for continued growth.
