Affirm Holdings is up about 25% on Friday morning: here’s why

Affirm Holdings Inc’s (NASDAQ: AFRM) revenue and volume topped Wall Street expectations in the fiscal fourth quarter. Shares of the company are roughly 25% up this morning on upbeat guidance for full-year volume, even excluding the boost from its recent buy-now-pay-later partnership with Amazon Inc.

Q4 financial performance

Affirm reported $128.2 million of net loss for the fourth quarter that translates to 48 cents per share. In the same quarter last year, it had posted $35.4 million in net income or 17 cents per share. The fintech firm generated $261.8 million in revenue versus the year-ago figure of $153.3 million.

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Gross merchandise revenue (GMV) stood at $2.5 billion – an increase from $1.2 billion last year. According to FactSet, experts had forecast $224.4 million in revenue and $2.2 billion in GMV.

Also on Friday, Mad Money host Jim Cramer said, “when worlds collide, it will be PayPal versus Affirm”.

Guidance for the future

For the full financial year, Affirm Holdings forecasts up to $1.19 billion in revenue and $12.45 billion to $12.75 billion in GMV, including up to $250 million in revenue and $2.42 billion to $2.52 billion in GMV it expects in the current quarter (Q1).

In comparison, analysts are calling for $1.16 billion in revenue and $12 billion in GMV this year. For Q1, their estimates are capped at $232.6 million in revenue and $2.2 billion in GMV.

Mizuho reiterates its ‘buy’ rating

According to Mizuho’s Dan Dolev, Affirm’s guidance was “very conservative”.

“While management revealed that the Amazon partnership was non-exclusive, this is unlikely to hurt the significant growth opportunity ahead, especially given that FY22 guidance does not include any Amazon contribution,” the analyst wrote in a note to clients.

Ahead of the earnings, Dolev had reiterated Affirm at ‘buy’ with a price target of $110 that has been hit today.