Most fintech companies have been suffering as of late due to the rise in interest rates over the last year, coupled with the failure of multiple banks during recent months. Affirm Holdings, Inc. (NASDAQ: AFRM) is a fintech company that recently unveiled its Q1 earnings report where the company beat both revenue and EPS estimates. Despite this, AFRM dropped by as much as 8% which can be an overreaction by the market. The rise in interest rates has affected fintech companies in different ways, but with a potential interest rate hike pause, the fintech space could have some breathing room moving forward.
AFRM Fundamentals
AFRM beat its earnings estimates as it reported a revenue of $380.9 million beating its estimate of $369.5 million by 3.08% and an EPS of -0.69 beating its -0.851 estimate by 18.9%. However, the AFRM stock price dropped 7% following its earnings call despite the company beating its estimates.
Concerns regarding rising interest rates and bank failures and their effects on what the company will have to pay to service its debts could have affected the stock, with its funding debt increasing from $672.5 million to $1.5 billion. During its earnings call, AFRM stated that higher credit spreads could affect its revenue less transaction costs which is a metric that measures the economic value of the transaction it processes. Nevertheless, if the Fed does stop raising interest rates and potentially cut them in the future, AFRM could be set to overcome this risk moving forward.
Yet, AFRM could witness some form of recovery, despite its recent headwinds due to the growth of its key metrics. AFRM’s gross merchandise volume increased from $3.9 billion to $4.6 billion while its revenues grew from $354.7 million to $380.9 million. Moreover, AFRM’s active consumers increased from 12.7 million to 16 million and its active merchants increased from 207 thousand to 246 thousand. Based on this, AFRM stock could rise in the future if it works out its funding debt problem.
AFRM Financials
In its Q3 2023 report, AFRM reported $7.5 billion in assets including $972.4 million in cash and equivalents and $3.7 billion in loans held for investment. AFRM witnessed an increase in its assets from $6.9 billion including an increase in loans held for investment from $2.5 billion, however, its cash and equivalents decreased from $1.2 billion in Q4 2022. UPST’s liabilities grew for the 9 months ended March 31, from $4.3 billion to $4.9 billion as its funding debt increased from $672.5 million to $1.5 billion.
For the three months that ended March 31, AFRM’s revenues grew YoY from $354.7 million to $380.9 million while its operating loss widened from $226.5 million to $310 million. Finally, AFRM’s net loss also widened from $54.6 million to $205.6 million.
Technical Analysis
AFRM stock trend is neutral as it is currently trading in a sideways channel between the support at $9.16 and the resistance at $12.31.
Looking at the indicators, AFRM is currently trading above the 21 MA, 50 MA, and 200 MA which is a bullish sign, THE RSI is neutral at 59, and the MACD is bearish
Fundamentally, AFRM stock’s most recent catalyst was its Q3 earnings. Still, it does not have any upcoming catalysts aside from the Feds possibly no longer increasing interest rates while potentially cutting them in the future.
AFRM’s stock doesn’t have a clear indication of how it’s going to shift, however, any possible changes in the current economic environment such as a decline in interest rates might shift the stock moving forward.
AFRM Forecast
AFRM’s stock price drop might have occurred due to concerns regarding rising interest rates and bank failures and their effects on what the company will have to pay to service its debts. Nevertheless, the company has been displaying significant growth rates despite its risks as presented during its latest earnings call. For this reason, AFRM stock might recover moving forward.
AFRM Fundamentals
AFRM beat its earnings estimates as it reported a revenue of $380.9 million beating its estimate of $369.5 million by 3.08% and an EPS of -0.69 beating its -0.851 estimate by 18.9%. However, the AFRM stock price dropped 7% following its earnings call despite the company beating its estimates.
Concerns regarding rising interest rates and bank failures and their effects on what the company will have to pay to service its debts could have affected the stock, with its funding debt increasing from $672.5 million to $1.5 billion. During its earnings call, AFRM stated that higher credit spreads could affect its revenue less transaction costs which is a metric that measures the economic value of the transaction it processes. Nevertheless, if the Fed does stop raising interest rates and potentially cut them in the future, AFRM could be set to overcome this risk moving forward.
Yet, AFRM could witness some form of recovery, despite its recent headwinds due to the growth of its key metrics. AFRM’s gross merchandise volume increased from $3.9 billion to $4.6 billion while its revenues grew from $354.7 million to $380.9 million. Moreover, AFRM’s active consumers increased from 12.7 million to 16 million and its active merchants increased from 207 thousand to 246 thousand. Based on this, AFRM stock could rise in the future if it works out its funding debt problem.
AFRM Financials
In its Q3 2023 report, AFRM reported $7.5 billion in assets including $972.4 million in cash and equivalents and $3.7 billion in loans held for investment. AFRM witnessed an increase in its assets from $6.9 billion including an increase in loans held for investment from $2.5 billion, however, its cash and equivalents decreased from $1.2 billion in Q4 2022. UPST’s liabilities grew for the 9 months ended March 31, from $4.3 billion to $4.9 billion as its funding debt increased from $672.5 million to $1.5 billion.
For the three months that ended March 31, AFRM’s revenues grew YoY from $354.7 million to $380.9 million while its operating loss widened from $226.5 million to $310 million. Finally, AFRM’s net loss also widened from $54.6 million to $205.6 million.
Technical Analysis
AFRM stock trend is neutral as it is currently trading in a sideways channel between the support at $9.16 and the resistance at $12.31.
Looking at the indicators, AFRM is currently trading above the 21 MA, 50 MA, and 200 MA which is a bullish sign, THE RSI is neutral at 59, and the MACD is bearish
Fundamentally, AFRM stock’s most recent catalyst was its Q3 earnings. Still, it does not have any upcoming catalysts aside from the Feds possibly no longer increasing interest rates while potentially cutting them in the future.
AFRM’s stock doesn’t have a clear indication of how it’s going to shift, however, any possible changes in the current economic environment such as a decline in interest rates might shift the stock moving forward.
AFRM Forecast
AFRM’s stock price drop might have occurred due to concerns regarding rising interest rates and bank failures and their effects on what the company will have to pay to service its debts. Nevertheless, the company has been displaying significant growth rates despite its risks as presented during its latest earnings call. For this reason, AFRM stock might recover moving forward.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.