Affirm shares rocket 29% after better-than-expected results and strong guidance
Affirm Holdings Inc. website home screen on a laptop computer in an arranged photograph taken in Little Falls, New Jersey.
Gabby Jones | Bloomberg | Getty Images
Affirm shares popped as much as 29% in afternoon trading on Friday, a day after the buy now, pay later firm reported fiscal fourth-quarter results that topped expectations and gave optimistic guidance for the first quarter.
Here’s how the company did:
- Loss per share: 69 cents vs. 85 cents as expected by analysts, according to Refinitiv.
- Revenue: $446 million vs. $406 million as expected by analysts, according to Refinitiv.
Affirm also gave strong guidance for the fiscal first quarter, projecting $430 million to $455 million in revenue, versus analyst expectations of $430 million.
The company reported gross merchandise volume, or GMV, of $5.5 billion, an increase of 25% year over year, and higher than the $5.3 billion expected by analysts, according to StreetAccount. GMV is a closely watched industry metric used to measure the total value of transactions over a certain period.
Affirm posted a net loss of $206 million, or 69 cents a share, compared to a net loss of $186.4 million, or 65 cents a share, in the year-ago quarter.
Buy now, pay later services such as Affirm soared during the pandemic alongside a boost in online shopping. But Affirm has been contending with a worsening economic environment, as well as rapidly rising interest rates.
“Despite significant changes in interest rates and consumer demand, we still delivered good credit results, unit economics, and GMV growth,” Affirm finance chief Michael Linford said in a statement. “We also demonstrated that the business can continue to expand profitably even in a high interest rate environment.”
The company acknowledged in its earnings report that the resumption of student loan payments in October will be “a modest headwind” to its fiscal 2024 GMV.
Analysts largely cheered the results. Deutsche Bank analysts raised their price target from $12 to $16 and reiterated their hold rating on the stock. They pointed to growth of the Affirm Card, the company’s debit card. Affirm was trading at over $17 a share midday Friday.
“While some uncertainty remains around how AFRM’s model will grow in the out years amid a cloudy macro, the company continues to show differentiated credit performance and we see potential upside to numbers if the Affirm Card lives up to the lofty expectations mgmt. has set for it,” the analysts wrote.
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In this photo illustration, a person is holding a smartphone with the logo of US GPU hardware company Lambda Inc. (Lambda Labs) on screen in front of website.
Timon Schneider | SOPA Images | AP
Cloud computing startup Lambda announced on Monday a multibillion-dollar deal with Microsoft for artificial intelligence infrastructure powered by tens of thousands of Nvidia chips.
The agreement comes as Lambda benefits from surging consumer demand for AI-powered services, including AI chatbots and assistants, CEO Stephen Balaban told CNBC’s “Money Movers” on Monday.
“We’re in the middle of probably the largest technology buildout that we’ve ever seen,” Balaban said. “The industry is going really well right now, and there’s just a lot of people who are using ChatGPT and Claude and the different AI services that are out there.”
Balaban said the partnership will continue the two companies’ long-term relationship, which goes back to 2018.
A specific dollar amount was not disclosed in the deal announcement.
Founded in 2012, Lambda provides cloud services and software for training and deploying AI models, servicing over 200 thousand developers, and also rents out servers powered by Nvidia’s graphics processing units.
The new infrastructure with Microsoft will include the NVIDIA GB300 NVL72 systems, which are also deployed by hyperscaler CoreWeave, according to a release.
“We love Nvidia’s product,” Balaban said. “They have the best accelerator product on the market.”
The company has dozens of data centers and is planning to continue not only leasing data centers but also constructing its own infrastructure as well, Balaban said.
Earlier in October, Lambda announced plans to open an AI factory in Kansas City in 2026. The site is expected to launch with 24 megawatts of capacity with the potential to scale up to over 100 MW.
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