Snap shares rocket 15% on strong forecast, $400 million Perplexity deal
Affirm CEO Max Levchin said Friday that while the buy now, pay later firm isn’t seeing credit stress among federally employed borrowers due to the government shutdown, there are signs of a change in shopping habits.
“We are seeing a very subtle loss of interest in shopping just for that group, and a couple of basis points,” Levchin told CNBC’s “Squawk on the Street.”
At least 670,000 federal employees have been furloughed in the shutdown, and about 730,000 are working without pay, the Bipartisan Policy Center said this week.
Levchin said he’s closely watching employment data for signs of major disruptions, but the company is “capable” of adjusting credit standards when needed.
“Right now, things are just fine,” he said. “We’re not seeing any major disturbances at all.”
The federal funding lapse, which began Oct. 1, is the longest in U.S. history and has halted work across agencies with an impact beyond those who are government employees. The SNAP food benefit program, which serves 42 million Americans, has also been cut off.
The comments from Levchin followed a fiscal first-quarter earnings report that blew past Wall Street’s estimates. Affirm posted earnings of 23 cents per share on $933 million in revenue. Analysts polled by LSEG expected earnings of 11 cents per share on $883 million in sales.
Revenues climbed 34% from a year ago, while gross merchandise volumes jumped 42% to $10.8 billion from $7.6 billion a year ago. That surpassed Wall Street’s $10.38 billion estimate.
The fintech company, which went public in 2021, also lifted its full-year outlook, saying it now expects gross merchandise volume to hit $47.5 billion, versus prior guidance of $46 billion.
Affirm also said it renewed its partnership with Amazon through 2031. The company has also inked deals with the likes of Shopify and Apple in a competitive e-commerce landscape.
Long-time partner Walmart recently ditched Affirm for Swedish buy now, pay later firm Klarna, which went public in September after delaying its public offering due to market uncertainty caused by President Donald Trump‘s tariff plans. Worries of a pullback in discretionary spending due to tariffs ignited fears across the fintech sector.
Levchin said categories such as ticketing and travel have seen an uptick in interest, and consumer shopping remains strong. Active consumers grew to 24.1 million from 19.5 million a year ago.
“We’re every single day out there preaching the gospel of buy now, pay later being the better way to buy, and consumers are obviously responding,” he said.
Block shares fell 10% Friday after weak third-quarter earnings fell short of Wall Street expectations and showed slowing profit growth for the company’s Square service.
Here is how the company did compared with LSEG estimates:
- Earnings per share: 54 cents adjusted vs. 67 cents expected
- Revenue: $6.11 billion vs. $6.31 billion expected
Revenue for the quarter was up 2% over last year. The Jack Dorsey-founded firm’s shares have fallen 24% year to date.
Square’s gross payment volume was up 12% year over year, but gross profit growth for the point-of-sale service was only up 9% over a year ago, slowing from last quarter’s 11%.
The company attributed the slower growth to a processing partner change and lower-margin hardware sales.
“Our product and go-to-market strategies are working as we continued to gain profitable market share in our target verticals like food and beverage, with larger sellers, and outside the U.S.,” Chief Financial Officer Amrita Ahuja said on the earnings call.
Cash App’s gross profit growth fared much better at $1.62 billion, increasing 24% over a year ago with 58 million monthly transacting active users. The strength was driven by the service’s Cash App Borrow, Cash App Card, and Buy Now Pay Later.
Morgan Stanley analysts wrote that they were “encouraged by the pace of credit expansion at Cash App” and are focused on “whether credit expansion will ultimately produce better inflows” per active customer and increase direct deposit accounts.
Ahuja said gross profit was a bright spot for Block, as the company reported $2.66 billion in gross profit growth, up 18% over the prior year. FactSet expected $2.60 billion in gross profit for the quarter.
The company raised its full-year guidance to expect a $10.2 billion gross profit for 2025, increasing from last quarter’s projection of $10.2 billion.
Block reported net income of $461.54 million, or 74 cents per share, which was up significantly over a year ago when the company reported net income of $283.75 million, or 45 cents per share.
Block year-to-date stock chart.
CNBC’s MacKenzie Sigalos contributed to this report.
Technology
Archer tanks 12% after air taxi maker sells additional 85 million shares, buys LA-area airport
Courtesy: Archer Aviation
Archer Aviation‘s stock plummeted 12% after a share sale overshadowed a narrower-than-expected third-quarter loss.
The company posted a net loss $129.9 million, narrower than the FactSet estimate of a $178.6 million loss.
However, Archer disclosed a $650 million stock offering for 81.25 million shares to support its $126 million acquisition of Hawthorne Airport in Los Angeles as a hub for air taxi operations there. Archer was chosen as the official air taxi provider for the 2028 Olympics in Los Angeles.
The move would dilute the value of the stock for existing shareholders. The weighted average for Archer shares outstanding has grown to about 660.9 million from 397.5 million a year ago.
Interest in electric aircraft makers has picked up in recent months as major players have edged closer to certification. Earlier this week, Beta Technologies went public on the NYSE.
Archer, like its competitors, is taking major steps toward achieving Federal Aviation Administration certification, a key approval needed to fly commercially.
In September, Archer said its Midnight aircraft reached a record altitude of 7,000 feet. The milestone came about a month after the company achieved its longest piloted flight.
Archer has bet big on building and deploying air taxis in the United Arab Emirates as competitor Joby Aviation teams up with Saudi Arabia.
For the current quarter, Archer said it expects a loss between $110 million and $140 million for adjusted earnings before interest, taxes, depreciation and amortization, a loss of $125 million at the midpoint. Analysts expected a loss of $119.9 million, according to FactSet.
Earlier this week, Joby Aviation reported a wider-than-expected third-quarter loss. Shares have slumped 20% over the last week, while Archer has lost nearly a third of its value. Both companies have more than doubled in value over the last year.
Archer Aviation and Joby Aviation year-to-date stock chart.
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