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Today's Bonus Story
Affirm: A Solid Footing or More Volatility Ahead?Authored by Peter Frank. Published: 3/29/2026. 
Key Points
- Affirm is delivering strong growth and improving profitability as adoption expands across merchants and consumers.
- Partnerships and network effects are strengthening its position in the competitive buy-now-pay-later market.
- Rising credit risks and intense competition could pressure margins if economic conditions weaken.
- Special Report: Elon Musk already made me a “wealthy man”
If you’ve ever split a purchase into multiple payments at checkout, there’s a good chance you used Affirm Holdings (NASDAQ: AFRM). The company sits at the center of the buy-now-pay-later (BNPL) boom, and after years of prioritizing growth over profits, it’s beginning to deliver on both. That’s the good news; there are, however, reasons to be cautious. Strong Growth and Profitability Signal Momentum
Fifty-year Wall Street veteran Marc Chaikin has issued a new bear market warning - his first since he predicted both the 2022 bear market and the 2020 COVID crash, each weeks in advance.
Chaikin warns that a major shift is underway at the core of the U.S. stock market, one that could trigger severe double-digit losses for millions of investors within the next 90 days. Watch Marc Chaikin's free interview to learn how to prepare
Affirm’s most recent quarter was a standout. In its second fiscal quarter, ended Dec. 31, gross merchandise volume (GMV)—the total value of purchases financed through its platform—reached $13.8 billion, up 36% from a year earlier. Revenue climbed 30% to $1.12 billion, while net income rose 61% year over year to $130 million. The company beat Wall Street expectations, reporting earnings of $0.37 per share, and delivered an adjusted operating margin of 30%. Underlying operating metrics were also strong. Total transactions in the second quarter jumped 44% to nearly 55 million, the number of merchants offering Affirm at checkout grew 42% to 478,000, and active customers increased 23% to 25.8 million. That increased adoption matters because, beyond any single partnership, it points to a network effect that can become self-reinforcing over time. Expansion Strategy and Partnerships Drive ScaleManagement has laid out a clear roadmap. Full-year GMV is projected to be $48.3–$48.85 billion, with revenue between $4.09 and $4.15 billion. Hitting those targets would help cement Affirm’s transition from a fast-growing startup to a more durable, expanding business. The company is also deepening its reach. Partnerships with Shopify (NASDAQ: SHOP), Wayfair (NYSE: W), Intuit (NASDAQ: INTU), Expedia (NASDAQ: EXPE), Worldpay, Fiserv (NASDAQ: FISV) and others show Affirm moving beyond discretionary retail and into everyday commerce. A partnership with Stripe, for example, enables shared payment tokens to flow to Stripe-connected sellers. Analyst Sentiment and Stock VolatilityAnalysts are broadly bullish, with a MarketBeat consensus of Moderate Buy. Of 28 firms covering Affirm, 19 rate it a Buy and nine rate it a Hold. Twelve‑month targets range from $55 to $110, with an average target of about $85 per share—roughly double the current market price. The current price, however, remains well below past peaks. The stock is down more than one-third from where it traded five years ago soon after its IPO and has fallen again—about 40%—since the start of this year. Those swings illustrate the volatility investors should expect. Credit Risks and Competitive PressureStrong revenue and improving profitability are encouraging, but Affirm carries meaningful risks. Credit markets are generally jittery. Loan delinquency rates at Affirm are up, and provisions for credit losses have risen. As a lender, Affirm’s earnings are sensitive to consumer credit performance; a softer economy could push losses higher and profits lower. And unlike traditional banks with decades of experience across credit cycles, Affirm is still operating in a relatively young category. Competition is also stiff. PayPal (NASDAQ: PYPL), Klarna (NYSE: KLAR), Afterpay and large banks are all pushing installment-payment products. Partnerships help defend Affirm, but they also create the risk of losing a major partner: Walmart (NASDAQ: WMT), for example, moved its primary BNPL relationship to Klarna last year. Such shifts can hit volume and revenue quickly. Insider activity is another detail worth noting. CEO Max Levchin has sold more than $110 million in company shares since September 2025, nearly half of which occurred in January when the stock was above $80 per share. The significance is unclear—insider sales can happen for many reasons—but investors should monitor insider transactions. There are no records of recent significant insider purchases. Overall, Affirm belongs in the higher-risk, higher-reward portion of a diversified portfolio that includes the financial services sector. The growth story is intact, profitability is improving, and the partnership strategy is building scale. It may appeal to investors interested in digital payments and consumer lending over the long term—or to those looking to trade its rallies. Either way, investors should be mindful of the credit and competitive risks before opening a position in AFRM. |
