Affirm’s stock quintupled this year, beating all tech peers, on buy now, pay later boom

Published

1 year ago

December 29, 2023

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Drew Angerer / Getty Images

A year ago, there was little holiday cheer at Affirm. The point-of-sale lender was confronting rising interest rates, recession fears and weakening consumer spending. Affirm shares ended 2022 down 90%, wiping out billions of dollars in market value.

Affirm investors are wrapping up 2023 in a much different mood.

The stock skyrocketed 430% in 2023, as of Wednesday’s close, outperforming all other U.S. tech companies valued at $5 billion or more. The next-best performer was Coinbase, which shot up 423% largely because of bitcoin’s rebound.

With the Federal Reserve setting the stage for interest rate cuts in the year ahead and more retailers signing onto Affirm’s buy now, pay later offerings, or BNPL, fear of a doomsday scenario for the company has faded. Shares of Affirm got a big boost in November after the company inked an expanded partnership with Amazon, and BNPL purchases hit an all-time high on Cyber Monday.

“The expectation was the consumer was going to be toast, unemployment was going to pick up and higher interest rates would destroy everything, and the exact opposite has happened on all fronts,” said Tom Hayes, chairman at Great Hill Capital, which doesn’t have a position in the stock. “So that’s why you have a scenario where Affirm can start to perform.”

Created in 2012 by PayPal co-founder Max Levchin, Affirm is competing with companies including Klarna, Block’s Afterpay and Zip in the burgeoning BNPL market. Shoppers who choose to pay with a BNPL service split their purchase into four or more installments typically over a period of three months to a year, without accruing compounding interest. The lenders make money from interest payments and by charging merchants fees to offer their lending services.

Retailers benefit by giving consumers another option for purchasing a skateboard, watch or a gift for a family member, and one that can come with less sticker shock, resulting in fewer abandoned carts.

Affirm’s run-up

Affirm made its public market debut on the Nasdaq in January 2021, as the Covid-19 pandemic was driving a surge in adoption of BNPL services. Shoppers flush with stimulus checks used the small loans when buying clothes, electronics and Peloton exercise bikes, which at one point accounted for 30% of Affirm’s revenue. Online storefronts rushed to add BNPL as an option at checkout.

But by early 2022, Affirm’s share price had fallen more than 60% from its 2021 peak. The rest of the year was just as gloomy as soaring interest rates made it more expensive for Affirm to borrow money to fund installment loans. In February 2023, Affirm cut 19% of its workforce, and executives said macro headwinds and “negative consumer sentiment” would likely persist for the remainder of the fiscal year.

Affirm shares soar on 'buy now, pay later' deal with Amazon

As it turns out, they were overly bearish.

Affirm shares started climbing higher in August after the company’s fiscal fourth-quarter earnings report. The company picked up new merchant deals in sectors beyond retail, such as travel, wireless, ticketing and health care. The stock has more than doubled in the fourth quarter, boosted by an announcement last week that Affirm would offer BNPL loans at Walmart‘s self-checkout kiosks.

Even with their dramatic bounce back, Affirm shares are about 70% below their high in November 2021.

Heading into 2024, BNPL lenders face cooling inflation and an optimistic interest rate environment.

Dan Dolev, managing director at Mizuho Securities, said Affirm is in a strong position to retain users. He pointed to new merchant deals and the expanding market for BNPL offerings in physical stores. Affirm says 16.9 million people have used its services, and the company counts more than 266,000 merchant partners.

Affirm is eyeing international expansion and has launched a debit card that lets customers pay upfront or in installments. Affirm announced at its investor day last month that it plans to introduce a spending account tied to its debit card that will allow for ATM access and direct deposit capability.

“The next year or two years are going to be something very different,” said Dolev, who has a buy rating on Affirm shares. “Now they’ve got the brand, and what are they going to do with it? They’re going to turn it into a full-fledged financial services firm.”

‘David against Goliath’

Hayes sees more cause for skepticism. He said Affirm faces an “uphill battle” competing with entrenched operators such as PayPal and Block, as well as credit card companies such as American Express, Citi and Chase that have jumped into installment loans.

“It’s David against Goliath, and Goliath is going to win,” Hayes said.

Hayes said Affirm is going down a similar path to online lender SoFi, trying to “have a thousand different projects, and say we’re as big as JPMorgan, but at the end of the day, it’s just simply not going to work.”

BNPL lenders also face heightened risk of users failing to make payments on time. A March report by the Consumer Financial Protection Bureau found BNPL users were on average more likely to have higher levels of credit card debt. BNPL borrowers also tend to have lower credit scores, the CFPB said, with an average score in the subprime range of 580 to 669.

The Affirm website home screen is displayed on a laptop in an arranged photograph taken in Little Falls, New Jersey, on Dec. 9, 2020.

Gabby Jones | Bloomberg | Getty Images

An Affirm spokesperson didn’t provide a comment for this story but pointed to past comments from company executives.

“As our network grows, our moats get deeper,” Levchin said at the company’s investor forum in November. “We get more data. We underwrite more transactions. We meet more people.”

Affirm’s defaults remain low by industry standards. Average delinquency rates for peers, such as LendingClub, SoFi, Upstart and OneMain Financial, increased from 5.7% to 6.3% between January and November, while Affirm’s delinquency rate fell from 2.8% to 2.6%, Jefferies analysts wrote in a report last month.

Affirm says it bases loan decisions on a variety of data points in addition to a user’s credit score.

“Our process involves looking at credit report data, but could also involve some Affirm-specific stuff, like what we know about the merchant and the thing they are about to sell you,” Levchin said in a release last year.

As BNPL adoption grows, regulators are keeping a close eye on the space. Last week, three U.S. senators penned a letter to the CFPB urging the agency to monitor the uptick in BNPL usage during the holidays, saying it could leave consumers overextended. The CFPB announced in September 2022 that it would subject BNPL to greater oversight, in line with credit card companies.

Wells Fargo issued a report earlier this month that described BNPL loans as “phantom debt” that may be lulling “consumers into a false security in which many small payments add up to one big problem.” As it stands today, the industry is “not a major problem for consumer spending yet,” Wells Fargo economists Tim Quinlan and Shannon Seery Grein wrote.

Since BNPL loans are not currently reported to major credit reporting agencies, they wrote, there is “no way to know when this phantom debt could create substantial problems for the consumer and the broader economy.”

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Technology

From ‘Cockroach Award’ to the Big Board: Hinge Health’s unlikely path to IPO

Published

38 mins ago

May 5, 2025

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From 'Cockroach Award' to the Big Board: Hinge Health's unlikely path to IPO

Hinge Health co-founders Gabriel Mecklenburg (left) and Daniel Perez (right).

Courtesy of Hinge Health

At digital physical therapy startup Hinge Health, CEO Daniel Perez used to recognize hard-working employees with the “Cockroach Award,” a distinction that brought with it a “cockroach squad” t-shirt and a cash payout.

References to the insect were abundant at the company’s old headquarters in London, where a picture of a cockroach was prominently displayed on the wall. For much of Hinge’s 10-year history, the cockroach was the unofficial mascot. Staffers named it Flossy after the viral dance move “the floss.”

Perez relishes the symbolism. In his determination to build a company that will push through adversity, he’s encouraged employees to think of themselves like cockroaches, due to the creature’s grimy resilience and noted ability to survive harsh conditions.

“It was the identity of every individual in the company,” said Joshua Sturm, a vice president at Hinge from 2019 to 2024 and now chief revenue officer at cancer prevention startup Color Health. “We are all in this together, and no matter what happens, we are going to survive together.”

Perez and his 1,400-person workforce now face the ultimate test of their mettle. Hinge, which moved from London to San Francisco in 2017, is trying to go public at a time of such extreme economic uncertainty and market volatility that several companies, including online lender Klarna and ticket marketplace StubHub, have delayed their long-awaited IPOs.

Hinge filed its prospectus on March 10, announcing plans to trade on the New York Stock Exchange under the ticker symbol “HNGE.” Three weeks later, President Donald Trump announced a sweeping tariff policy that plunged U.S. markets into turmoil after tariff concerns had already pushed the Nasdaq to its worst quarter since 2022.

But Hinge. led by its 39-year old co-founder and CEO, appears determined to power through the chaos. Hinge declined to comment or make Perez available for an interview.

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Going public was already going to be a risky endeavor for Hinge. The IPO market has been mostly dormant since late 2021, when soaring inflation and rising interest rates pushed investors out of risky assets. Within digital health, it’s been almost completely dead.

Health-tech companies have struggled to adapt to a more muted growth environment following the Covid pandemic, and many once promising business models haven’t panned out as planned.

The starkest example is virtual health company Teladoc, which has a market cap of just over $1 billion less than five years after buying digital health provider Livongo in a deal that valued the combined companies at $37 billion. Teladoc’s BetterHelp mental health unit has been a particularly troublesome business as paying users dropped off in the years following the pandemic.

Over time, Hinge’s Cockroach Award transitioned from a monthly prize to a quarterly distinction. The company phased it out entirely about a year ago in preparation for its next public-facing chapter, but the survive-at-all-costs mentality persists, according to current employees. Now, staffers are recognized with the “Movers Awards,” a nod to the company’s focus on movement.

“We have many decades of work ahead,” Perez wrote in a letter to investors in March. “We hope you join us on this journey.”

CNBC spoke to 13 current and former Hinge employees, investors, and people close to Perez for this story, some of whom asked not to be named in order to provide candid commentary.

‘I gave him terrible advice’

Hinge uses software to help patients treat acute musculoskeletal injuries, chronic pain and carry out post-surgery rehabilitation remotely. Large employers like Target and Morgan Stanley cover the costs so their employees can access Hinge’s app-based virtual physical therapy, as well as its wearable electrical nerve stimulation device called Enso.

The company says its technology can help users manage pain, cut down health-care costs and reduce the need for surgery and opioids. Revenue increased 33% to $390.4 million last year, while its net loss narrowed to $11.9 million from $108.1 million a year earlier, according to the prospectus.

Hinge’s roster of clients expanded by 36% last year to 2,256, and the number of individual members jumped 44% to over 532,300, the filing said.

Hinge has raised more than $1 billion from investors including Tiger Global Management and Coatue Management, and it boasted a $6.2 billion valuation as of October 2021, the last time the company raised outside funding. The biggest institutional shareholders are venture firms Insight Partners and Atomico, which own 19% and 15% of the stock, respectively, according to the filing.

Daniel Perez, CEO of Hinge Health

Courtesy: Hinge Health

Perez and Gabriel Mecklenburg, Hinge’s executive chairman, started the company in 2014. The pair met while they were both pursuing PhDs in the U.K. — Perez at the University of Oxford and Mecklenburg at Imperial College London. They were distracted students, according to Perez’s twin brother, David.

By the time they launched Hinge, Perez and Mecklenburg had already co-founded two other ventures together. One was the Oxbridge Biotech Roundtable, an organization that connected academics and industry experts. The other was Marblar, which worked to commercialize academic intellectual property.

Perez took a leave of absence from Oxford while working on Marblar and never returned. His brother wasn’t a fan of the decision initially.

“I gave him terrible advice,” said David Perez, a graduate of Yale Law School and partner at Perkins Coie in Seattle. “I was like, ‘I think you’re an idiot, I think you should focus on your PhD. Only an idiot would not finish a PhD at Oxford.'”

The twins have two older siblings. Their mother immigrated from Cuba in 1968, followed 12 years later by their father. Their parents met in Miami, got married after just three dates, and are still together after more than 40 years.

The family moved from Miami to Salt Lake City, Utah, in 1990. Perez’s mother was a substitute teacher and his father worked at restaurants as a dishwasher and busboy. David Perez said their father “worked around the clock” and used to call out orders in his sleep.

“It wasn’t a lot of money, I think combined they made about $19,000 a year,” David Perez said. “But they stitched it together and raised four kids.”

The twin boys were competitive, particularly when it came to academics and playing basketball in the driveway. David said his brother got “great grades” and always had an inclination toward science and medicine, graduating from high school at age 16 and then starting college at Westminster University, a small liberal arts school in Utah.

“I swear,” David Perez said, “there were times where the only punishment that my mom could issue that would have the sting was restricting our ability to do homework.”

Hit by a car

Perez was a student in the Honors College at Westminster, and he graduated with a degree in biology. Richard Badenhausen, dean of the Honors College, described Perez as an independent thinker and an ambitious student, especially for his age.

“He didn’t care too much what people thought about him, which is a strength in my book,” Badenhausen said in an interview.

When Perez was 13, he was hit by a car. He broke an arm and a leg, and had to be airlifted to a nearby hospital. After three surgeries and 12 months of rehab, he had a newfound interest in orthopedics and physical therapy.

Mecklenburg had a serious injury of his own, tearing his anterior cruciate ligament (ACL) during a judo match, which also required a year of rehab, according to Hinge’s website.

One day in October 2014, the pair put their heads together and outlined the tools they wished were available while undergoing physical therapy. Musculoskeletal conditions affect as many as 1.7 billion people worldwide, according to Hinge’s prospectus, so there was no shortage of opportunities.

They had the early concept of Hinge within hours and a prototype ready by December of that year.

In Hinge’s early days, Perez and Mecklenburg would meet every Saturday morning to talk shop. Now, as they’ve aged and started families, they meet on Wednesday nights, according to colleagues. Perez welcomed his first child with his wife late last year.

“Seeing the growth over the last six, seven, eight years has just been unbelievable,” said Jon Reynolds, a tech founder who contributed to Hinge’s seed funding round. “That comes down to the quality of Dan and Gabriel as leaders. They complement each other really well, and they’ve obviously got that mutual respect.”

Perez is a hands-on CEO who expects a lot from his staff.

He’s direct, detail-oriented, opinionated, competitive and can be intense, according to current and former employees. But he’s committed to the mission and the wellbeing of his employees, they said.

“He’s one of those rare founder CEOs who I think can go all the way,” said Paul Kruszewski, a former Hinge employee who joined the company after it acquired his Canadian computer vision startup, Wrnch, in 2021.

Hinge Health’s Enso product.

Courtesy: Hinge Health

Employees say Perez is a voracious reader, often finishing two to four books a month. That includes books about business and leadership, an important source of information given that Hinge was his first real job. He’s a fan of “The Innovator’s Prescription,” by Clayton Christensen and others, “Crossing the Chasm,” by Geoffrey Moore and “The Long Fix,” by Dr. Vivian Lee.

He also likes his staffers to read. Executives will often prepare to discuss chapters from a book in their meetings.

“I’d come home and there’d be a package from Dan, and it’s a book,” said Sturm, who led partnerships and new market development at Hinge. “That was just the norm.”

Sturm, who has worked in the health-care and benefits space for around 30 years, said Hinge was very deliberate with hiring, so there wasn’t a lot of turnover among senior executives. He said Hinge’s recruitment process was the hardest he’s ever experienced.

Another “Dan-ism,” as Sturm called it, is Hinge’s philosophy around writing. Perez has employees write memos, typically up to six pages long, instead of preparing slide decks or other materials ahead of meetings. Perez was inspired by a similar practice at Amazon, according to current and former employees, and sees it as a way to force employees to think through what they want to say instead of hiding behind bullet points.

Hinge’s memo culture can be an adjustment, particularly for new employees. Sturm said he thought the practice was “insane” at first, but ultimately came to appreciate it and said it improved his pitches.

“When you sort of sit back, you go, ‘You know actually, he wasn’t wrong,'” Sturm said.

Hinge has come a long way since venture firm Atomico led the $8 million Series A investment in 2017. The London-based firm said in a blog post at the time that it was “extremely impressed by Daniel and Gabriel, and their determination to tackle a big problem in society.”

Carolina Brochado led the round, though she left Atomico a year later and now works at investment firm EQT Group. She said that getting Hinge to the brink of an IPO was a “one in a million chance,” but noted that the company has managed to build a sizable business in digital health despite having so many odds stacked against it.

“Lots of learnings along the way, of course, like a big tech correction in the middle,” Brochado said in an interview. “But it really is one of those rare examples of just an enormous market that was under penetrated.”

For David Perez, whose firm now serves as Hinge’s outside counsel, watching the startup grow has been “fascinating,” he said.

“I’m a partner at a major law firm,” he said, “and I am only the second most successful twin. But I think I’m okay with that.”

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Technology

Hims & Hers brings former Amazon executive into C-suite

Published

2 hours ago

May 5, 2025

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Hims & Hers brings former Amazon executive into C-suite

Bringing nearly 20 years of global experience at Amazon, Nader Kabbani is joining the executive leadership team to help the company further innovate on the delivery of affordable, seamless personalized care in the U.S. and globally.

Courtesy: Hims & Hers

Hims & Hers Health on Monday announced Nader Kabbani, a former Amazon executive who helped establish many of its health-care offerings, will join the telehealth company as its chief operations officer.

Kabbani spent nearly 20 years at Amazon, where he oversaw the launch of Amazon Pharmacy, the company’s acquisition of PillPack and its global Covid-19 Vaccination Task Force. He also helped stand up Amazon Kindle, Amazon Logistics, Amazon Music and Prime Video services.

Hims & Hers offers a range of direct-to-consumer treatments for conditions like erectile dysfunction and hair loss. The company, which saw revenue increase by 69% last year, said Kabbani will help the company continue to grow and scale.

“Nader’s experience scaling operations at the highest level makes him uniquely qualified to help us build the future of healthcare,” Hims and Hers CEO Andrew Dudum said in a statement.

In addition to his experience at Amazon, Kabbani also held executive leadership roles at the supply chain logistics company Flexport and the warehouse automation company Symbotic.

Stock Chart IconStock chart icon

Hims & Hers shares over six months.

Hims & Hers shares had a volatile start to the year, notching several double digit moves over the last few months. Investors have been paying close attention to the company’s weight loss offering, which was thrown into question after the U.S. Food and Drug Administration announced changes to the medication supply environment earlier this year.

Shares of the company closed up 23% on April 29, for instance, after Novo Nordisk said it would offer its weight loss drug Wegovy through telehealth providers like Hims & Hers.

The stock was down more than 1% on Monday but was up more than 70% year to date.

Hims & Hers is slated to report earnings after market close.

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Technology

Trump set to raise millions from crypto and memecoin this month

Published

2 hours ago

May 5, 2025

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Trump set to raise millions from crypto and memecoin this month

Jonathan Raa | Nurphoto | Getty Images

President Donald Trump has two crypto-focused dinners on the calendar this month — one aimed at deep-pocketed political donors, the other at memecoin millionaires. Both are poised to help him rake in millions.

The first event, a $1.5 million-per-plate fundraiser set for Monday, is among the priciest political fundraisers in recent memory. The second, on May 22, offers access to Trump’s inner circle not for cash — but for holders of the $TRUMP token.

Hosted by MAGA Inc., the “Crypto & AI Innovators Dinner” on May 5 features special guest David Sacks — who has been helping to rewrite the country’s crypto and artificial intelligence rules.

The committee receiving the funds, MAGA Inc. is a super PAC that supports Trump, but the president is constitutionally barred from running for a third term. It’s unclear how the PAC plans to spend the millions of dollars it is raising this spring at a series of dinners.

The crypto community has cheered Sacks’ growing influence in Washington, crediting him and other Trump-aligned appointees with a sweeping policy shift that’s already delivered a spate of regulatory wins across multiple federal agencies — in what many industry executives are describing as a 180 pivot from President Joe Biden.

The second gala dinner will be held at Trump National, the president’s private club in the Washington, D.C., area, later this month. The guest list will be decided by a blockchain-based contest run by the creators of the $TRUMP memetoken. Instead of cash, entry is based on how many tokens a user holds, with the top 220 promised dinner with Trump himself. The contest runs through May 12.