A potential double top and short opportunity AFRM had a nice run up to the current level, but I would be cautious here, since it looks like a double top in the making. If price starts to drop , it'll probably ty go as low as $25.
AFRM trade ideas
$AFRM Possible Double Top InsightNASDAQ:AFRM double top insight on the weekly chart, a development that is garnering attention from both bears and bulls in the market. Bears are keen on seeing the stock reach this critical level soon, as it could indicate a reversal and a potential downturn. On the other hand, bulls are looking for signs of bullish consolidation, as this could provide the momentum needed to break through this level, invalidating the double top and potentially leading to further upward movement.
"Short" Term Investor ThinkingIf you're swinging calls short term, then congrats on the crazy rise. And who knows, it could go to $40 in the short term.
If you're a long term investor however, the inevitable will eventually catch up to this company. This company is not profitable, and they keep being super aggressive and increasing their losses as they generate more revenue. In a climate with high rates, high credit delinquency, and potentially a credit default in the future (just my opinion), this company is doomed. BNPL is seen as a bad sign for the economy considering people are struggling to pay off their holiday shopping and choose to "worry about it later".
Not to mention, the competition is high in this type of business with competing brands such as Klarna, Quadpay, Paypal's BNPL, and more.
Not financial advice, good luck to all :)
$AFRM Breaking outWhile the initial breakout is an important indicator, the key now is to wait for confirmation of this trend. Confirmation refers to additional signs or signals that reinforce the breakout's validity, suggesting it's not a false or temporary movement. After confirmation, investors and analysts often anticipate a pullback, a slight reversal or dip in the stock's price following the breakout. This pullback can provide an opportunity for investors to enter the market at a more favorable price point, assuming the overall bullish trend continues.
$AFRM Double TopThe stock of Affirm Holdings, Inc. (ticker symbol: NASDAQ:AFRM ), has demonstrated a technical pattern known as a "Double Top." This pattern is identified on the chart by two distinct peaks at approximately the same price level and is considered a bearish reversal formation. It typically indicates that the stock has attempted to break through a certain price point on two separate occasions but has failed to maintain upward momentum.
In the case of NASDAQ:AFRM , after the stock price reached its first peak, it subsequently retreated, only to rise back to that peak level again. The inability of the stock to push past this resistance level during the second attempt is what completes the Double Top pattern. Technical analysts interpret this as a signal that the buying pressure is exhausted and that the sellers are starting to dominate, potentially leading to a trend reversal from previously bullish to bearish.
The confirmation of the Double Top pattern would come with a break below the support level that lies between the two peaks, often referred to as the "neckline." If the price of NASDAQ:AFRM falls below this neckline with significant volume, it could confirm the pattern and suggest a potential sell-off, as traders may take this as a cue to exit long positions or possibly establish short positions.
Investors using technical analysis would keep a close watch on NASDAQ:AFRM for any significant moves below the neckline, as this could indicate the start of a downward trend and a shift in the stock’s momentum. It's important to note, though, that while technical patterns like the Double Top can provide insights, they should ideally be considered alongside other fundamental and market factors when making investment decisions.
Long Trade Setups: AMC CVNA PIXY UPST Some high risk high reward stocks in watching.
Small caps could get squeezy in the near term.
$AFRM Macro Headwinds May Drag It DownAffirm Holdings, Inc. (NASDAQ: AFRM) is a BNPL service provider that rose to prominence during the pandemic. Currently, the stock is up more than 60% since releasing its 2023 annual report, despite the Fed’s tightening policy showing its impact on the company’s operations. With the student loan repayments resuming last month after a 3-year pause, the company may struggle in the coming quarters as consumers will have to choose between paying rent, buying food, and paying their BNPL loans. Meanwhile, its cost of capital is high due to the high interest rates which may impact its bottom line. Considering the underwhelming earnings and guidance by fellow fintech startup Upstart Holdings, Inc. (NASDAQ: UPST), AFRM stock may be poised to lose all the gains it made in recent months on its guidance when it reports on November 8th after hours.
AFRM Fundamentals
Fed’s Policy is Squeezing Consumers
The high interest rate environment has severely impacted customer spending. In the Commerce Department’s final revision of Q2 GDP, consumer spending was revised to a .8% annualized rate, significantly down from the 1.7% reflected in the previous estimate. All in all, spending in Q2 grew at its slowest pace since Q1 2022 when it was flat.
Despite this, BNPL use is still growing with 46% of Americans saying they’ve used such loans which is up from 43% last year, according to a survey conducted by LendingTree (NASDAQ: TREE). Since Affirm is one of the leading BNPL providers, it wasn’t surprising to see the lender grow its customers by 18% YoY in Q4 2023 to 16.5 million. That said, this increase may not be positive as more consumers are using BNPL services to make ends meet.
The aforementioned survey found that 27% of BNPL users use these loans as a bridge to their next paycheck amid rampant inflation, high interest rates, and growing layoffs. In addition, these loans are being used to purchase groceries with 21% of BNPL users having used at least one of such loans to buy groceries.
At the same time, the survey found that 40% of users have paid late on at least one of their loans. That being said, it’s worth noting that BNPL users have a lower credit rating than non-BNPL borrowers.
In a Consumer Financial Protection Bureau (CFPB) survey, BNPL borrowers had an average credit score in the range of 580 – 669 which makes them “subprime borrowers”. Meanwhile, consumers who don’t use BNPL have an average score in the range of 670 – 739 which is the prime range.
Furthermore, about half of BNPL users had less cash and savings than what they paid for their BNPL purchases. This means that these users wouldn’t be able to afford those purchases without borrowing which could be due to them having a credit card utilization rate between 40% and 50%.
Another finding of the survey was that BNPL users were 11% more likely to have a delinquency of at least 30 days. The difference between BNPL users and non-BNPL users is especially clear when looking at their store and credit card debts. 9% of BNPL users with credit cards missed payments of 30 days or more, compared to only 3% of non-BNPL borrowers. Additionally, 8% of BNPL users were late making payments on their store cards, compared to 1% of consumers who don’t use BNPL.
While Affirm’s delinquency rates remained near last year’s levels, they could start increasing in the next 2 quarters given that the company’s fiscal year ends on June 30. This means that its last reported figures don’t take into consideration the hardships faced by consumers.
Therefore, the company’s Q1 and Q2 2024 earnings reports will be critical to get a better picture of how the current macro environment will impact both its top line and bottom line, especially with the resumption of student loan repayments.
Student Loan Repayments Will Deal Another Blow
With student loan repayments resuming this month, this will certainly add more pressure on consumers. Goldman Sachs analysts expect the resumption of student loan payments to cost households around $70 billion per year which would subtract .8% from consumer spending in Q4 2023, slowing it down to 1.4%, per their estimates.
As a result, Affirm’s gross merchandise value (GMV), which is the total value of transactions, could witness decelerating growth or even decline in the coming quarters. The company’s GMV already witnessed decelerating growth in Q4 2023 as it grew 25% YoY compared to 76% in Q4 2022 due to the current macro environment.
This is further proof that consumers are spending more cautiously, and with student loan repayments resuming, consumers’ excess savings are likely to further shrink, tightening their credit. As a result, AFRM may report another decelerating GMV growth in its upcoming Q1 earnings.
Tightening Policy is Showing Its Impact
In addition to student loan payments, the current high interest rates could further impact Affirm’s earnings in the coming quarters after the Fed’s tightening policy started to show its impact on the company’s operations in Q4 2023. Since Affirm is not a bank, it doesn’t have customer deposits that it can use to fund its BNPL loans. Therefore, it partners with banks or issues bonds to raise the capital required to lend its customers. As interest rates are at a 22-year high, Affirm’s cost of capital is increasing which makes it more expensive for it to make BNPL loans.
This was evident in the company’s Q4 2023 earnings with its revenue less transaction costs declining 1% YoY as the benefits of larger volume could not outweigh inflated financing obligations. RLTC is a critical metric for BNPL providers since it measures the profitability of the business by subtracting the funding costs from the revenue generated from BNPL transactions. Moreover, the higher interest rates have led Affirm’s funding costs in FY 2023 to increase by a staggering 163% YoY. As such, it is clear that interest rates are starting to impact the profitability of the company’s business.
That said, the company has implemented a number of pricing initiatives to offset the impact of the high interest rates. These initiatives include increasing its maximum APR from 30% to 36%, offering low APR loans ranging from 4% to 9.99% as an alternative to monthly 0% APR programs, as well as shortening loan lengths and minimum order sizes for monthly 0% APR programs.
However, these initiatives may cause the company’s customers to use other BNPL providers that offer better terms when making their purchases, especially with the resumption of student loan repayments that will add pressure on consumers as discussed earlier.
Looking ahead, most analysts anticipate the Fed will hike rates one more time in 2023 to ultimately achieve a restrictive policy stance sufficient to curb inflation. Further tightening would serve to increase Affirm’s cost of borrowing and squeeze loan margins. In this way, there is little room for the company to compensate through volume alone without more aggressive repricing that endangers its customer base.
Upside Risks
The main risk to AFRM stock’s bearish thesis is if consumer spending doesn’t get impacted by the resumption of student loans. Mizuho analysts estimate the resumption of student loan repayments to present a 2% headwind to the BNPL industry’s growth volume which is insignificant. Also, Mizuho found in a survey that consumers with student loan debt tend to have higher incomes compared to those who don’t. As such, Affirm may not be impacted by this event, however, it is worth noting that BNPL users who have student loan debt use more BNPL services than those who aren’t repaying student loans which could prove to be an issue for the company’s business.
Technical Analysis
On the hourly chart, AFRM stock is in a neutral trend, however, it recently broke its sideways channel between $16.4 and $21.3. Looking at the indicators, the stock is above the 200, 50, and 21 MAs which is a bullish sign. Meanwhile, the RSI is neutral at 63 and the MACD is bearish.
As for the fundamentals, AFRM’s upcoming Q1 earnings on November 8th after hours will be a major catalyst, especially after UPST’s results. Considering the tough macro environment for BNPL providers, the company may report underwhelming financials and guidance which could see the stock fall near the $16 support. Therefore, investors could start a short position in the stock in the $22 to $20 range.
AFRM Forecast
While more Americans are using BNPL services this year compared to last year, they are facing trouble paying off their loans. With student loan repayments resuming last month, consumers will be under more pressure as they will have to choose between paying rent, buying groceries, repaying their student loan debt, and paying BNPL loans. This could have catastrophic impacts on Affirm as its delinquency rates may increase in FY 2024.
At the same time, the resumption of student loan repayments is expected to slow down consumer spending amid the high interest rates. On that note, the current macro environment reflected on Affirm’s Q4 earnings as its GMV growth decelerated from 76% last year to 25% which means that consumers are already spending more cautiously without accounting for student loan repayments. Meanwhile, the company’s RLTC declined 1% YoY, indicating that the profitability of its business is under threat since this means that its cost of capital is high. Given that these headwinds may severely impact Affirm’s top line and bottom line in FY 2024, investors may find it lucrative to take a short position in its stock.
AFRM Affirm Holdings Options Ahead of EarningsIf you haven`t bought AFRM ahead of the previous earnings:
or when you saw those big puts adding:
Then Analyzing the options chain and the chart patterns of AFRM Affirm Holdings prior to the earnings report this week,
I would consider purchasing the 20usd strike price Puts with
an expiration date of 2024-1-19,
for a premium of approximately $2.17.
If these options prove to be profitable prior to the earnings release, I would sell at least half of them.
Looking forward to read your opinion about it.
Affirm Shares Soar 19% On BNPL Offering For Amazon BusinessShares of payments provider Affirm (AFRM) jumped more than 19% after expanding its partnership with Amazon (AMZN) to offer buy now, pay later (BNPL) services to the e-commerce giant's business-to-business (B2B) clients.
Thousands of small business users on Amazon Business—most of them sole proprietors—stand to benefit from expanded payment options that include paying off their purchases via equal installments over three to 48 months.
While most BNPL payment options don't charge interest, customers on Amazon's B2B platform will be charged an annual percentage rate (APR) between 10% and 36% depending on perceived credit risk, Affirm's Chief Revenue Officer Wayne Pommen said in an interview with CNBC.
At a time of rising borrowing costs, this could be a viable alternative to traditional payment options like credit cards—on which interest rates have soared to records recently, reaching a median of 24.12% across all credit cards.
Amazon's partnership with Affirm stretches back more than two years, when the e-commerce giant first introduced the financial firm's BNPL services on its website, offering it to customers who spent $50 or more on a purchase.
Earlier this year, Amazon also added Affirm as a BNPL payment option on Amazon Pay
Affirm shares have more than doubled so far this year/
AFRM Affirm Holdings big puts addingLast time, AFRM puts were profitable:
This week, Affirm Holdings (AFRM) saw a notable increase in the acquisition of puts with a November 3rd expiration date, set at a $17.50 strike price with a premium of $0.67.
Affirm operates within the "buy now, pay later" model, which has also been dubbed as "pay never" by some analysts.
However, it's worth noting that AFRM currently operates as an unprofitable venture, and its current valuation may be perceived as inflated.
I'm eager to hear your perspective on this matter!
$AFRM: Could struggle at 20AFRM has some concerning action here around the 20 handle and it's possible it may be too much to overcome. We'll stay tuned and find out.
AFRMHolding this demand zone for now. Not a bad name to look for a long trade in if the market catches a bounce imo.
Adding $AFRM chart to my watchlist. Gap up and hold the gap on high volume. Great stock behavior in my mind. If it can hold this area and push above $20 then I will load this stock. $20 alert is what I'm waiting for. NASDAQ:AFRM
AFFIRM - is this still a good buy?
CNBC has reported recently the surge of AFFIRM shares after better-than-expected results as per the screenshot above.
AFFIRM (a buy now pay later business) has published some exciting highlights.
Let us look at their GAAP and non-GAAP reconciliation in detail:
AFFIRM makes a profit in the most recent quarter by using non-GAAP measurements. Using the whole year results ending 30 June 2023, total revenue is $1.587B and total operating costs are $2.788B, representing an operating loss of $1.2B.
Yet through the lens of non-GAAP, the last quarter was profitable with $14.7M because non-GAAP does not include the costs of depreciation & amortization, stock-based compensation, enterprise warrant, restructuring and other costs. Going forward, I recommend all to focus more on the GAAP figures as that gives a better view of the financials. Creative accounting and business narratives can distract us from having a realistic view of the business.
The need to probe further into the financials is necessary so that we can better appreciate the financial fundamentals of the business. After 1 year, AFFIRM suffered a loss of $1.2B, compared to the loss of $0.866B from the same period a year ago.
Conclusion
Let us perform the due diligence necessary so that we can filter out great companies. It is possible that some of the media focus on certain good parts and omit other “necessary” portions.
No one should care more about our money than ourselves. The due diligence will be the leverage we have. Should the price plunge, this will give us the confidence to hold or buy even more.
Without good fundamentals, I recommend staying away.
NASDAQ:AFRM
August Trades (AFRM, account up 17.89%)11th day trade in August is NASDAQ:AFRM on 8/25/2023.
Account is up 17.89%.
Total return in August is 51.5%.
AFRM Can it continue the move after earnings ?AFRM jumped about 27% from a decent earnings beat on Thursday August 24th.
It is now sitting in the tip of a bullish pennant pattern and at the POC line of the
volume profile. The dual time frame RS indicator suggests strength is above 50
after the close of the week fade. The MACD lines crossing and above the horizontal
.
zero suggests this is simply a rest in bullish momentum Price is above then mean VWAP
and tracking one standard deviation above it. My trade plan is long or short depending
on how price moves off the POC line. I have drawn entry levels for a market or buy stop
order. The stop loss would be the opposite blue line. Targets start out at 19.5 and upside from
there.
AFRM - Rising Trend Channel [MID-TERM]🔹Breakdown support of rising trend channel in the medium long term.
🔹Support at 13.81 and Resistance at 19.99 in Rectangle formation
🔹Slightly risen above the resistance level of 17.
🔹Technically POSITIVE for the medium long term.
Chart Pattern:
🔹DT - Double Top | BEARISH | 🔴
🔹DB - Double Bottom | BULLISH | 🟢
🔹HNS - Head & Shoulder | BEARISH | 🔴
🔹REC - Rectangle | 🔵
🔹iHNS - inverse head & Shoulder | BULLISH | 🟢
Verify it first and believe later.
WavePoint ❤️
Affirm Potential Seen HereAffirm Potential Seen Here using the conventional studies showing an upside.
Using conventions of Head and Shoulders etc > Show there is a potential for an Upside.
Time will prove the Strategy.
Your thoughts and comments and critic's on my studies are welcome.
Lets Work Together.
Regards Graham. Invest.
AFRM Affirm Holdings Options Ahead of EarningsIf you haven`t sold AFRM here:
Then analyzing the options chain and the chart patterns of AFRM Affirm Holdings prior to the earnings report this week,
I would consider purchasing the 14.50usd strike price Puts with
an expiration date of 2023-8-25,
for a premium of approximately $1.12.
If these options prove to be profitable prior to the earnings release, I would sell at least half of them.
Looking forward to read your opinion about it.
Down to $12 -$13 before another leg up to +$20Here's what I see for AFRM. Although we're def. in an a up trend I think we're going to see a leg down to around $12 -$13 before it rips to $20. My long term outlook is at around $40 for AFRM. We have a bearish divergence on the MACD histogram which gives us a heads up in which direction the stock is about to move.
AFRM and UPSTThe price correlation between AFRM and UPST is 0.73, meaning the two stocks tend to move in the same direction. This is not surprising, as both companies are in the same industry (digital lending) and have similar business models. However, it is important to note that correlation does not equal causation, and there are other factors that could be affecting the price of these stocks.
For example, both AFRM and UPST have been affected by rising interest rates, making it more expensive for consumers to borrow money. This has led to a decline in both stocks' prices in recent months.
In addition, both companies are facing increased competition from traditional banks and other fintech companies. This could also put downward pressure on their stock prices in the future.
Overall, the price correlation between AFRM and UPST is relatively high, but it is important to consider other factors when making investment decisions.
Here are some other factors that could affect the price of AFRM and UPST:
Consumer spending
Economic growth
Regulatory changes
New product launches
Acquisitions
It is important to monitor these factors and their impact on AFRM and UPST stock prices.
