Core Insights - Affirm Holdings, Inc. (AFRM) shares have increased by 145.7% over the past year, outperforming the industry growth of 35.1% and the S&P 500's gain of 12.3% [2] - The company's strong performance is attributed to product innovation, strategic execution, and an expanding base of consumers and merchants [2] Financial Performance - In fiscal Q3 2025, 94% of transactions were from repeat customers, indicating the success of Affirm's short-term payment plans [7] - Total transactions rose by 45.6% year-over-year to 31.3 million in the last reported quarter [8] - The Zacks Consensus Estimate for fiscal 2025 earnings suggests a 101.8% year-over-year improvement to 3 cents per share, with fiscal 2026 earnings expected to reach 73 cents [14] Business Strategy - Affirm is focusing on driving repeat usage as a sustainable growth strategy, which is more cost-effective than customer acquisition [6] - The company is expanding its merchant mix to include essential categories like food, travel, and subscriptions, enhancing daily engagement [8] - Affirm is scaling operations internationally, with plans to enter France, Germany, and the Netherlands through a partnership with Shopify [10] Product Development - Affirm's model provides value to merchants by reducing cart abandonment and increasing average order value, while offering consumers flexible payment options [12] - The company is investing in debit solutions and B2B tools to broaden its product ecosystem and increase transaction frequency [13] Market Position - Affirm is trading at 5.68X forward 12-month sales, slightly below the industry average of 5.85X, but above its three-year median of 3.59X [15] - The competitive landscape is intensifying, with legacy players like PayPal and Block expanding aggressively in the BNPL space [20]

Core Insights - Zacks Premium offers various tools to help investors make informed decisions and enhance their confidence in the stock market [1][2] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum characteristics, aiding investors in selecting securities with high potential for market outperformance [2][3] Zacks Style Scores - Each stock is rated from A to F based on its value, growth, and momentum, with A being the highest score indicating a better chance of outperforming the market [3] - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Cash Flow [3] - The Growth Score assesses a company's financial health and future outlook by analyzing projected and historical earnings, sales, and cash flow [4] - The Momentum Score helps investors capitalize on price trends by evaluating recent price changes and earnings estimate revisions [5] - The VGM Score combines the three Style Scores to identify stocks with attractive value, strong growth forecasts, and promising momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to assist investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 top-rated stocks available, making it essential for investors to utilize Style Scores to narrow down their choices [9] Investment Strategy - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with lower ranks, such as 4 (Sell) or 5 (Strong Sell), should be approached with caution, even if they have high Style Scores [11] Company Spotlight: Affirm Holdings - Affirm Holdings, Inc. is a financial technology company that offers flexible installment loans at the point of sale, partnering with various merchants [12] - Currently rated 3 (Hold) on the Zacks Rank, Affirm has a VGM Score of B and a Momentum Style Score of B, with shares increasing by 24.2% over the past four weeks [12][13] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate increasing by $0.12 to $0.03 per share, and an average earnings surprise of 102.2% [13]

Core Insights - Affirm Holdings, Inc. (AFRM) and SoFi Technologies, Inc. (SOFI) are prominent players in the fintech sector, targeting Gen Z, millennials, and older consumers with technology-driven financial solutions [1][2] - Affirm focuses on point-of-sale financing through a buy now, pay later (BNPL) model, while SoFi offers a broader platform that includes lending, investing, banking, and tech infrastructure [1][2] Affirm's Performance - Affirm reported $783.1 million in revenues for Q3 fiscal 2025, a 36% year-over-year increase, and achieved an adjusted EPS of $0.01, surpassing estimates [3][9] - The company raised its full-year revenue guidance to $3.163-$3.193 billion, up from the previous range of $3.13-$3.19 billion [3] - Affirm's growth is supported by expanding merchant partnerships and a growing international presence, with an expected adjusted operating margin of 23-23.6% for fiscal 2025 [4][5] - The company is leveraging AI to enhance productivity and customer interactions, and it has completed 24 asset-backed securitizations totaling $12.25 billion [6][7] SoFi's Performance - SoFi achieved record revenue of $770.7 million in Q1 2025, a 33% increase from the previous year, with net income rising over 200% to $71.5 million [8][10] - The platform added over 800,000 new users, bringing total membership to 10.9 million, and its adjusted EBITDA reached $210.3 million with a 27% margin [8][10] - However, SoFi's reliance on unsecured personal loans, which constitute nearly 70% of its lending portfolio, raises concerns about credit risk, especially with a borrower-level delinquency rate of 3.49% [11][12] Liquidity and Financial Health - Affirm's current ratio stands at 11.5, indicating strong liquidity, while SoFi's current ratio is below average at 0.8, suggesting limited flexibility to meet near-term obligations [9][12] - SoFi's current liabilities amount to $27.9 billion, with only $2.7 billion in cash as of March 31, 2025 [12] Growth Estimates - Zacks estimates indicate Affirm's fiscal 2025 sales and EPS are expected to grow by 37% and 101.8%, respectively, while SoFi's sales and EPS are projected to rise by 26.2% and 80% [13] - Affirm's earnings momentum is stronger compared to SoFi, with EPS estimates trending upward for both companies [13] Price Performance - Year-to-date, AFRM shares have increased by 9.8%, while SOFI shares have grown by 8.9%, outperforming the S&P 500 Index's 2.9% growth [16] - Affirm has shown stronger short-term momentum with a 1-month gain of 32% compared to SoFi's 25.9% [16] Valuation Comparison - Affirm is trading at 5.49X forward 12-month P/S, slightly higher than SoFi's 5.15X, reflecting investor confidence in Affirm's rapid scaling and profitability [19] - SoFi's broader but more complex business model is valued more conservatively, potentially due to operational diversification and execution risks [19] Conclusion - Both Affirm and SoFi are innovative fintech companies with strong growth narratives, but Affirm currently exhibits more growth potential due to its profitability, revenue growth, and disciplined execution [22][23] - Affirm's integration of AI, risk-managed lending, and robust capital partner network support its scalability, while SoFi faces challenges related to credit concentration risk and liquidity pressures [22][23]

Core Insights - Affirm Holdings, Inc. has partnered with Shopmonkey to become the default pay-over-time option for auto repair customers in the U.S. and Canada, allowing customers to split repair costs into manageable payments, sometimes at 0% APR, with no hidden fees [1][2][9] - This partnership provides Affirm access to a large network of small and mid-sized auto shops, expanding its presence in the auto repair spending category, which averages nearly $800 per year per car owner [2][9] - The collaboration is expected to boost Affirm's transaction volume and customer base, with total transactions growing 45.6% year-over-year to 31.3 million in the last reported quarter [3][9] Company Performance - Affirm handled over $33 billion in gross merchandise volume over the past year, enhancing brand trust and visibility by aligning with practical, recurring expenses [4] - Affirm's merchant network now exceeds 358,000 members, further expanding its reach in the market [4][9] - Year-to-date, Affirm's shares have gained 8.8%, underperforming the broader industry but outperforming the S&P 500 Index [7] Valuation and Estimates - Affirm trades at a forward price-to-sales ratio of 5.44X, slightly below the industry average of 5.80 [11] - The Zacks Consensus Estimate for Affirm's fiscal 2025 earnings implies a 101.8% improvement year-over-year, indicating strong growth potential [13]

Group 1 - Affirm Holdings is a rapidly growing player in the Buy Now, Pay Later market [1] - The company is approaching a significant inflection point with the potential achievement of GAAP operating profitability in the near term [1]

Core Insights - Shopmonkey has integrated Affirm as a default pay-later provider for auto repair shops, enabling them to offer flexible financing options to customers [2][3] - This partnership aims to enhance customer satisfaction and promote long-term growth for small and medium-sized auto shops by allowing car owners to spread out maintenance costs [3] Group 1: Partnership Details - The arrangement allows car repair shops using Shopmonkey's payment processing solution to offer pay-over-time financing through Affirm [2] - Affirm's payment options will help thousands of small and medium-sized auto shops better serve their customers [2][3] Group 2: Consumer Behavior Insights - Car owners typically spend nearly $800 annually on maintenance, and the new financing option will facilitate easier payment for necessary services [3] - Research indicates that 35% of consumers made emergency purchases of at least $250 in the past year, with a median cost of $605 [4] - Approximately half of unplanned retail purchases are made using credit, with BNPL accounting for 10% of these transactions [5] Group 3: Financial Trends - Among Americans living paycheck-to-paycheck, 75% have utilized BNPL plans, indicating a significant reliance on alternative credit sources [5] - The trend towards budget-friendly payment options is influencing consumer behavior for both large and small purchases [6] - Consumers facing cash shortfalls are more likely to use BNPL, with 8.9% reporting usage compared to those without such issues [6]

Core Insights - Affirm Holdings, Inc. has renewed its long-term capital partnership with Moore Specialty Credit, extending the agreement through May 2027, which reflects ongoing confidence in Affirm's lending model [1][9] - The partnership is crucial for Affirm as it ensures reliable, long-term funding to support growing loan originations, allowing the company to maintain its zero late fee model while scaling [2] - Affirm has handled over $33 billion in gross merchandise volume in the past year, with a funding capacity of $23.3 billion, supported by 24 asset-backed securitizations totaling $12.25 billion [3][9] Funding and Partnerships - The renewed partnership with Moore Specialty Credit signifies a decade of collaboration, with Moore having invested nearly $5 billion in Affirm's assets since 2017 [1][9] - Affirm has also deepened its partnership with PGIM Fixed Income by launching a new $3 billion revolving pass-through loan sale facility, enhancing its access to diversified, off-balance-sheet funding [4] Market Position and Performance - Affirm's shares have gained 7.8% year to date, underperforming the broader industry but outperforming the S&P 500 Index [7] - The company trades at a forward price-to-sales ratio of 5.40X, which is lower than the industry average, and carries a Value Score of F [11] - The Zacks Consensus Estimate for Affirm's fiscal 2025 earnings implies a 100.6% improvement year over year, indicating strong growth potential [13]

Airlines & Travel Industry - Delta Airlines is considered the best performing company in the airline sector [1] - Airlines have generally underperformed compared to other sectors [1] Financial Services & Credit - FICO is starting to incorporate buy now pay later schemes into credit scores [1] Energy Sector - USO (United States Oil Fund) is showing some stability in the oil market [2] General Market Commentary - The report mentions the presence of Morgan Stanley interns, indicating a focus on future talent in the financial industry [1][2]

Core Insights - Affirm Holdings, Inc. has expanded its partnership with PGIM Fixed Income by establishing a new $3 billion revolving loan sale facility, allowing PGIM to purchase up to $500 million of Affirm's consumer loans at any time over a 36-month period [1][2][9] Group 1: Financial Stability and Scalability - The new facility enhances Affirm's financial stability and scalability, providing predictable access to capital to support loan growth and meet consumer demand [3][4] - This arrangement reflects growing confidence in Affirm's loan portfolio and secures a reliable funding source for its buy now, pay later (BNPL) offerings without frequent reliance on volatile public debt markets [2][3] Group 2: Impact on Cost of Capital - The deal improves Affirm's funding flexibility and may reduce its overall cost of capital by limiting reliance on more expensive public financing options [4][9] - The revolving structure caps loan exposure at any time, ensuring liquidity and operational efficiency, which strengthens Affirm's capital position [4][9] Group 3: Market Position and Competitors - PayPal and Block are expanding their presence in the BNPL space, with PayPal launching a new physical PayPal Credit Mastercard and Block integrating Afterpay services into Cash App [5][6] - Both companies are targeting seamless omnichannel experiences to capture the growing BNPL market, indicating a competitive landscape for Affirm [5][6] Group 4: Valuation and Earnings Estimates - Affirm trades at a forward price-to-sales ratio of 5.09X, which is lower than the industry average, and carries a Value Score of F [10] - The Zacks Consensus Estimate for Affirm's fiscal 2025 earnings implies a 100.6% improvement year over year, with significant growth projected for the following year [12][13]

Core Insights - Affirm has launched a new revolving pass-through loan sale facility with PGIM Fixed Income, allowing PGIM to invest up to $3 billion over 36 months by purchasing up to $500 million of Affirm loans at any one time [1][2] - This facility expands the existing capital partnership between Affirm and PGIM, supporting Affirm's pay-over-time options for consumers [2][3] - Affirm has issued 23 asset-backed securitizations totaling $11.5 billion, with participation from over 150 capital partners [4] Funding Capacity - As of March 31, Affirm's funding capacity has increased for nine consecutive quarters, reaching $23.3 billion [5] - In January, Affirm expanded its capital partnership with Liberty Mutual Investments, allowing LMI to purchase Affirm's installment loans up to $750 million outstanding through June 2027 [5] - In December, Affirm formed a long-term capital partnership with Sixth Street, which will invest up to $4 billion in Affirm loans over a three-year forward flow agreement [6]