Shares in consumer financing firm Affirm Holdings have plunged since mid-November when high-growth tech stocks fell out of favor. But Wall Street smells a beat-and-raise when AFRM stock reports December-quarter earnings late Thursday.
Analysts polled by FactSet project a 32-cent per share loss on revenue of $329.1 million, with gross merchandise volume of $3.73 billion for Affirm. The three months ending Dec. 31 mark the end of AFRM stock's fiscal second quarter.
AFRM stock jumped 14.5% to close at 74.68 on the stock market today. The company is one of the biggest providers of buy now, pay later installment payment services.
Some analysts expect Affirm to raise 2022 guidance because of a budding partnership with e-commerce giant Amazon.com.
AFRM Stock: Amazon Impact On 2022 Guidance?
"We believe ongoing momentum in BNPL spending, management conservatism, and AFRM's increased traction with large merchants should drive a meaningful beat-and-raise on gross merchandise volume (GMV) and revenue," Bank of America analyst Jason Kupferberg said in a note to clients.
He added, "Given that Affirm's fiscal 2022 outlook does not include Amazon, we believe the current fiscal 2022 revenue/GMV guidance will again be raised."
Morgan Stanley analyst James Faucette had a similar view in his note to clients.
"We see several sources of upside to Affirm's December quarter and 2022 results from the AMZN and Shopify partnerships, recently rolled out features and products like the Debit+ card, expansion of the credit box, and Affirm's ability to drive engagement and user adoption on its platform," he said.
Faucette added, "We think estimates for the next several quarters could move up meaningfully as results come in ahead."
Affirm Stock: Peloton A Drag But Partnerships Expand
At RBC Capital, analyst Daniel Perlman also has an upbeat outlook on Affirm.
"We expect fiscal 2022 guidance will likely need to be increased for two main reasons," he said in a note. "One, we expect outperformance in the current quarter being flowed through to 2022 and two, prior guidance didn't contemplate its Amazon partnership or Debit+ volumes, which could be included this go around."
Struggling Peloton Interactive has been a large customer of Affirm. But Affirm has also forged several partnerships, including Walmart.
Under an expanded deal, Affirm will be the only provider of BNPL services to Amazon until January 2023. In addition, Amazon Pay plans to integrate Affirm into its digital wallet in the U.S.
More Regulatory Scrutiny For Buy Now, Pay Later?
The initial public offering for AFRM stock in January raised $1.2 billion. Affirm gets most of its revenue from transaction fees paid by online retailers.
AFRM stock also faces pressure, due to worries BNPL service providers will face tougher regulation. Another concern for AFRM stock is how rising interest rates will impact delinquency rates for consumer loans.
Buy now, pay later — or BNPL — services generally split interest-free payments into three or four equal installments over two months or less. However, Affirm stretches out some BNPL plans for as long as 60 months. In addition, Affirm gets more than one-third of its revenue from interest income paid by consumers.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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