Affirm Holdings, Inc. AFRM recently announced that it is entering into a long-term capital partnership with global investment firm Sixth Street. Under this partnership, Sixth Street will invest up to $4 billion in purchasing Affirm loans over the next three years through an innovative AssetCo structure. In the same month, PGIM Fixed Income completed a $500 million private purchase of Affirm’s loans.
This transaction is the largest capital commitment in Affirm’s history. By leveraging this funding, Affirm gains the flexibility to extend more than $20 billion in loans over the same period, enabling the company to scale its payment network while maintaining a capital-efficient approach. AFRM will benefit from improved working capital, which will aid it in investing its resources effectively to grow its business. This move also strengthens Affirm’s funding base, which now boasts a 50% increase in total funding capacity over the past two years to $16.8 billion as of Sept. 30, 2024.
Affirm aims to regularly add capacity across various channels and enhance its relationship with long-term capital partners. Partnerships like these should aid the company in achieving its fiscal 2025 GMV objective of more than $34 billion. Revenues, as a percentage of GMV, are projected to expand at least 20 basis points from the fiscal 2024 figure. By combining stronger funding capabilities with an ever-growing merchant network, Affirm is poised to solidify its leadership in the BNPL space, attract more consumers, and continue driving merchant growth.
Affirm’s Price Performance
Over the past year, shares of Affirm have surged 61.8% compared with 24.8% growth of the industry it belongs to.
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AFRM’s Zacks Rank & Other Key Picks
Affirm currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Business Services space are Parsons Corporation PSN, RB Global, Inc. RBA and SPS Commerce, Inc. SPSC. While Parsons sports a Zacks Rank #1 (Strong Buy), RB Global and SPS Commerce carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Parsons outpaced estimates in each of the last four quarters, the average surprise being 17.49%. The Zacks Consensus Estimate for PSN’s 2024 earnings indicates an improvement of 40.7% from the 2023 figure. The consensus mark for revenues implies growth of 24.2% from the 2023 figure. The consensus mark for PSN’s earnings has moved 6.9% north in the past 60 days.
RB Global’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.31%. The Zacks Consensus Estimate for RBA’s 2024 earnings indicates an improvement of 11% from the 2023 figure. The consensus mark for revenues implies growth of 13.8% from the 2023 figure. The consensus mark for RBA’s earnings has moved 2.8% north in the past 60 days.
The bottom line of SPS Commerce outpaced estimates in each of the last four quarters, the average surprise being 10.65%. The Zacks Consensus Estimate for SPSC’s 2024 earnings indicates an improvement of 21.1% from the 2023 figure. The estimate for revenues implies growth of 18.5% from the 2023 number. The consensus mark for SPSC’s earnings has moved 2.1% north in the past 60 days.
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