AFRM stock fell -21% on February 11, 2022, after the company Q2 results on February 10, 2022. This means the stock is down more than -60% since Cramer told viewers of CNBC to buy the stock.

Affirm Reports Fiscal Year 2022 Second Quarter Results

On February 10, 2022, Affirm Holdings (NASDAQ: AFRM), the payment network that empowers consumers and helps merchants drive growth, today reported financial results for its fiscal 2022 second quarter ended December 31, 2021. Affirm reported Q2 EPS of (57c) versus (38c) last year. The company reported Q2 revenueThe income statement provides a summary of a company's revenue and expenses over a specified period of time, typically a year or a quarter. It shows the company's total revenue, th... of $361M versus the consensus estimate of $328.8M. The company said gross merchandise volume, or “GMV,” for the second quarter of fiscal 2022 was $4.5B, an increase of 115%. Excluding the impact from the completion of the initial rollout of Affirm’s interest-bearing solution with Amazon in November, GMV doubled.

Second Quarter of Fiscal Year 2022 Operating Highlights:

Unless otherwise stated, all comparisons are made versus the same period in fiscal year 2021.

1. Gross merchandise volume (“GMV”) for the second quarter of fiscal 2022 was $4.5 billion, an increase of 115%. Excluding the impact from the completion of the initial rollout of Affirm’s interest-bearing solution with Amazon in November, GMV doubled.
2. Active merchants increased from 8,000 to 168,000, driven primarily by the adoption of Shop Pay Installments by merchants on Shopify’s platform.
3. Active consumers grew 150% to 11.2 million and increased by 2.5 million, or 29%, compared to the period ended September 30, 2021.
4. Transactions per active consumer increased 15% to 2.5 as of December 31, 2021.

Second Quarter of Fiscal Year 2022 Financial Highlights:

Unless otherwise stated, all comparisons are made versus the same period in fiscal year 2021.

1. Total revenue was $361.0 million, a 77% increase, driven by increases in network revenue resulting from GMV growth, higher interest income related to growth in loans held for investment, gains on sales of loans due to higher forward flow volume, and greater servicing income as the platform portfolio scaled.
2. Total revenue less transaction costs1 increased 93% to $183.6 million, primarily as a result of the strong revenue growth, as well as slower growth in transaction costs as the Company achieved scale efficiencies. In the period, provision for credit losses increased by $40.1 million from the quarter ended December 31, 2020. This increase was primarily driven by a release of excess loan allowance in the prior year period and a more normal credit environment in the quarter ended December 31, 2021 compared to the prior year.
3. Operating loss was $196.2 million compared to $26.8 million in the second quarter of fiscal 2021, and includes an $82.0 million increase in stock-based compensation following the Company’s January 2021 initial public offering, as well as investments in product and engineering talent and marketing to realize the Company’s growth opportunities.
4. Adjusted operating loss for the second quarter of fiscal 2022 was $7.9 million, compared to adjusted operating income of $3.1 million for the second quarter of fiscal 2021.
5. Net loss for the second quarter of fiscal 2022 was $159.7 million compared to $26.6 million in the second quarter of fiscal 2021, and includes the above-mentioned increase in stock-based compensation following the Company’s IPO, as well as $34.0 million of additional expense recognized based on the change in fair value of the contingent consideration liability associated with the Company’s acquisition of PayBright driven by increases in the value of its common stock.

Recent Business Highlights

1. Completed the initial rollout of Affirm’s first integrated point-of-sale solution at Amazon in the U.S. in November 2021.
2. Introduced Affirm’s new SuperApp and browser extension in January and Cash Back Rewards in December 2021.
3. Issued $1.725 billion in zero-coupon senior convertible notes in November 2021. The offering provides the Company with significant growth capital at an attractive borrowing cost, while minimizing shareholder dilution.
4. Replaced the Company’s prior corporate credit facility with a new $165 million revolving credit facility on February 4, 2022. The new facility provides the Company with improved economics, increased financial covenant flexibility, and lower fees.
5. Completed the Company’s first static (non-revolving) securitization designed to fund longer-term, interest-bearing financing programs on February 9, 2022. The deal, which is comprised of consumer loans totaling over $400 million, priced in early February.

Michael Linford, CFO of Affirm, commented, “We are proud of the results our team delivered this quarter leveraging our superior technology, proprietary underwriting, and robust capital markets expertise. We expanded access to more people and delivered positive credit outcomes while both loosening the credit box and continuing our responsible approach to underwriting every transaction. The successful convertible note offering also provides additional flexibility to invest in our growth and extend our advantages. Looking ahead, we remain highly confident in our ability to drive hyper-growth and attractive unit economics at scale.”

“Affirm’s strong growth accelerated this quarter, reflecting the key advantages of our superior technology and commitment to putting people first,” said Max Levchin, Founder and CEO of Affirm. “We more than doubled gross merchandise volume year over year. Over the last 12 months, we have added nearly seven million active consumers to our network while enabling 168,000 merchant partners to better serve their customers.”

Levchin continued, “Millions of people see Affirm as a smart way to pay because of our honest, transparent, and customizable payment terms. Merchants recognize our ability to help them drive growth and deliver the experience consumers are demanding at checkout. We remain focused on extending our lead as we scale enterprise partnerships and benefit from self-reinforcing network effects. With our talented team of Affirmers, we have never been more excited to expand the impact of our mission.”

Affirm price target lowered to $100 from $150 at Truist

On February 11, 2022, Truist analyst Andrew Jeffrey lowered the firm’s price target on Affirm (AFRM) to $100 from $150 after its wider than expected Q2 earnings loss but kept a Buy rating on the shares. The analyst states that his bullish view reflects an expectation that buy-now-pay-later will comprise a significantly greater share of global tender and sees Affirm as a leader in the space. Still, he also “cannot explain” an apparent sharp slowdown in non-Shopify (SHOP) gross merchandise volume growth.

Affirm price target lowered to $83 from $127 at RBC Capital

On February 11, 2022, RBC Capital analyst Daniel Perlin lowered the firm’s price target on Affirm to $83 from $127 but kept an Outperform rating on the shares. The company’s Q2 results were “strong” with gross merchandise volume up 115%. Still, he is lowering his enterprise value to expected revenue multiple to 12-times from 18-times to reflect the material re-rating in the broader software and payments universe, the analyst tells investors in a research note.

Affirm downgraded to Underperform at Jefferies on margin concerns

On February 11, 2022, as previously reported, Jefferies analyst John Hecht downgraded Affirm to Underperform from Hold with a price target of $45, down from $55, noting that the company’s guidance for 2022 implies lower margins and slowing growth while take rates have been declining for six straight quarters with lower unit economics. Macro conditions are becoming less constructive for Affrim, and he finds it challenging to identify an emerging catalystA stock catalyst is an engine that will drive your stock either up or down. A catalyst could be news of a new contract, SEC filings, earnings and revenue beats, merger and acquisit... given his expectations for continued good revenue growth along with declining margins, Hecht tells investors in a research note after investors “appear disappointed” despite the company’s fiscal Q2 top-line beat and higher FY22 guidance.

Affirm price target lowered to $51 from $72 at Stephens

On February 11, 2022, Stephens analyst Vincent Caintic lowered the firm’s price target on Affirm to $51 from $72. He kept an Equal Weight rating on the shares, noting that his GMV estimates remain above consensus for FY22 at $15.1B. Still, his transaction cost estimates are “much higher” following the company’s report of its fiscal Q2 results. “Candidly,” he thought bullish investors would value the GMV guidance beat rather than Affirm’s net transaction profit margin miss. Still, he was “wrong,” and this “points to an interesting phase in the maturity” of the company’s valuation as it appears “the time horizon to achieve profitability has shortened,” Caintic tells investors.

📺 SHOCKING: Jim Cramer TALKS AFRM (Affirm) Stock | Says to BUY over $100!!

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📺 Affirm shares fall on forward guidance

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📉 AFRM Stock Technical Analysis

The short-term trend is neutral, while the long-term trend is still negative. We need more time to see how the technicals develop before considering a long entry. Prices have been falling strongly lately, it is better to avoid new long positions here. AFRM is part of the IT Services industry. There are 153 other stocks in this industry, of which 78% are performing better than AFRM. AFRM is currently making a new 52 week low. This is a very bad signal. AFRM is lagging the S&P500 Index which is trading in the middle of its 52-week range.

The technical rating of AFRM is bad and it also does not present a quality setup at the moment. AFRM stock has a Setup Rating of 3 out of 10. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when AFRM stock consolidates and has a Setup Rating of 8 or higher.