Fintech Sector Overview - Fintech stocks have been negatively impacted by rising interest rates over the past two years, but a decline in interest rates could present a buying opportunity for undervalued stocks [1] - Companies with defensible niches, robust sales growth, improving margins, and reasonable valuations are potential turnaround plays in the fintech sector [1] Robinhood Markets (HOOD) - Robinhood's stock has declined more than 70% from its all-time high and is trading nearly 50% below its IPO price [2] - The company's revenue surged 37% to $1.87 billion in 2023, surpassing its pandemic-era record high of $1.82 billion in 2021 [2] - Adjusted EBITDA improved from negative $94 million in 2022 to positive $536 million in 2023 due to cost-cutting measures [3] - Analysts expect Robinhood's revenue and adjusted EBITDA to grow 39% and 104%, respectively, in 2024 [4] - The stock is trading at 33 times this year's adjusted EBITDA, which is considered reasonable [4] Affirm (AFRM) - Affirm's stock has declined 75% from its all-time high and is still trading 15% below its IPO price [5] - Revenue surged 46% to $2.32 billion in fiscal 2024, compared to 18% growth in fiscal 2023 [5] - Adjusted operating margin improved from negative 5% to positive 16% in fiscal 2024 [5] - Adjusted EBITDA improved from negative $1.07 billion to negative $447 million in fiscal 2024 [5] - Analysts expect revenue to rise 29% to $3 billion in fiscal 2025, with adjusted EBITDA improving to negative $58 million [6] Nu Holdings (NU) - Nu Holdings has more than tripled its customer base from 33.3 million in 2021 to 104.5 million in Q2 2024, becoming the fourth-largest financial institution in Latin America [7] - The company's activity rate increased from 76% in 2021 to 83% in 2023, with monthly average revenue per active customer more than doubling [8] - Revenue grew at a compound annual growth rate of 117% from 2021 to 2023, and the company turned profitable in 2023 [8] - Analysts expect revenue and adjusted earnings to grow 40% and 68%, respectively, in 2024, with the stock trading at 25 times forward earnings [8]

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, September 5th:Grupo Supervielle S.A. (SUPV) : This financial services holding company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 8.8% over the last 60 days.Grupo Supervielle’s shares gained 26.6% over the last three months compared with the S&P 500’s advance of 3.1%. The company possesses a Momentum Score  of A.Air Industries Group (AIRI) : Thi ...

Here are five stocks added to the Zacks Rank #1 (Strong Buy) List today:Banco de Chile (BCH) : This banking and financial products and services company has seen the Zacks Consensus Estimate for its current year earnings increasing 10.2% over the last 60 days.Affirm Holdings, Inc. (AFRM) : This payment network company has seen the Zacks Consensus Estimate for its current year earnings increasing 43.1% over the last 60 days.International Consolidated Airlines Group S.A. (ICAGY) : This passenger and cargo tran ...

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.Whil ...

These ten large-cap stocks were the best performers in the last week. Are they in your portfolio? Also Read: Photo via Affirm ...

I going to make a greatest artwork as I can, by my head, my hand and by my mind.Affirm Holdings (NASDAQ:AFRM) skyrocketed on Thursday as investors digested the fintech’s strong quarterly earnings that were released after market close on Wednesday. Affirm Holdings, with its focus on buy now, pay later products, saw its sales surge 48% YoY amid robust demand for credit card alternatives. The fintech is growing its buy now, pay later platform at scale and easily surpassed Wall Street’s profit targets. I th ...

Shares of Affirm Holdings, Inc. (AFRM) surged 31.9% yesterday thanks to better-than-expected fourth-quarter fiscal 2024 results and optimistic guidance, including a goal to achieve operating income profitability on a GAAP basis in the fourth quarter of fiscal 2025. Its buy now, pay later (BNPL) services gained popularity during high inflation, driving its growth.AFRM’s Key Q4 DriversIts fourth-quarter fiscal 2024 results revealed a 19% year-over-year increase in active merchants to 303,000. Strength in gene ...

Core Insights - Affirm reported strong earnings, leading to a 30% increase in stock price, highlighting the effectiveness of its business model and user profile [2] - The misconception that Affirm primarily serves financially insecure consumers is debunked, as data shows that middle-income consumers are more likely to carry credit card debt [3][4] - Affirm's partnerships with major platforms like Shopify have attracted higher-income users, indicating a shift in its customer base towards mainstream credit card users [11][12] User Profile and Credit Card Debt - Credit card liabilities account for 6% of total household debt in the U.S., with outstanding balances reaching $1.14 trillion as of Q1 2024 [4] - Middle-income consumers, rather than low-income consumers, predominantly carry credit card debt, with 40-60% of them affected [4][6] - The belief that consumers with credit card debt cannot repay it is challenged by data showing that debt balances typically account for 40-60% of income, suggesting temporary debt for larger purchases [6][8] Affirm's Growth and Performance - Affirm's Gross Merchandise Volume (GMV) has shown growth in newer cohorts post-FY2020, contrasting with stagnant spending from earlier users [9][11] - The company has outperformed large banks in terms of credit card delinquency rates, particularly in the 60- and 90-day categories, indicating superior risk management [13] - Affirm's return on equity (ROE) stands at 51%, significantly higher than Bank of America's 12%, suggesting a more profitable model if operating efficiency is maintained [16] Financial Metrics and Operational Efficiency - Affirm's operating expenses have decreased, with technology, sales, and marketing costs down by 19%, 10%, and 10% respectively compared to 2023, while revenues grew by 46% [19][22] - The company is expected to achieve GAAP profitability by the end of FY2025, supported by partnerships with major payment platforms [22][23] - Affirm's transaction margin and revenue per employee are competitive, with a market capitalization under $10 billion, indicating potential for premium valuation if margins improve [29][31] Competitive Landscape - Affirm's transaction margins and take rates are among the highest in the BNPL sector, positioning it favorably against competitors like PayPal and Klarna [26][27] - The company is expected to capture a larger share of the credit card market, particularly among consumers with credit card interest debt, as it moves towards mainstream acceptance [23][31] - Affirm's distinctive business strategy and capital efficiency may pose a threat to established competitors in the financial services industry [32]

Key TakeawaysAffirm reported quarterly results that beat analysts' expectations for revenue and net income.CEO Max Levchin expects the company to be profitable by the fourth quarter of fiscal 2025.The company's first quarter revenue guidance range exceeded the analyst consensus. Affirm Holdings (AFRM) shares are surging after the buy now, pay later (BNPL) fintech company posted better-than-expected fiscal fourth-quarter results and strong guidance after the bell Wednesday. Revenue jumped 48% year-over-year ...

Core Insights - Affirm Holdings, Inc. (AFRM) reported better-than-expected fourth-quarter fiscal 2024 results, driven by improved servicing income, card network revenues, and higher transaction volumes, despite rising expenses primarily due to increased provisions for credit losses [1][2][3] Financial Performance - The fiscal fourth-quarter loss was 14 cents per share, significantly better than the Zacks Consensus Estimate of a loss of 45 cents and the prior year's loss of 69 cents [1] - Total net revenues reached $659.2 million, exceeding management's expectations of $585-$605 million, and representing a 47.8% year-over-year increase [1][2] - Active merchants increased by 19% year over year to 303,000, with Gross Merchandise Volume (GMV) climbing 31% year over year to $7.2 billion, surpassing management's expectations [2] - Total transactions rose 42% year over year to 24.7 million, driven by a significant increase in repeat customer transactions [2] Revenue Breakdown - Servicing income improved by 18.9% year over year to $27.6 million, exceeding the consensus mark of $25.4 million [2] - Interest income surged 57% year over year to $337.6 million, higher than the consensus estimate of $325.7 million [2] - Merchant network revenues totaled $181 million, growing 28% year over year, and card network revenues rose 26.2% year over year to $43 million [3] Expense Analysis - Total operating expenses increased by 6.2% year over year to $732.6 million, primarily due to higher loan purchase commitments and funding costs [3] - Provision for credit losses escalated by 24.5% to $117.6 million, while technology and data analytics, sales and marketing, and general and administrative expenses decreased year over year [3] Adjusted Operating Metrics - Affirm generated an adjusted operating income of $150 million, significantly up from $15 million in the prior-year quarter, with an adjusted operating margin of 23% [4] - The net loss of $45.1 million was narrower than the prior year's loss of $206 million [4] Financial Position - As of June 30, 2024, cash and cash equivalents stood at $1 billion, a 13.6% increase from the fiscal 2023-end figure, while total assets rose 16.7% to $9.5 billion [5] - Funding debt amounted to $1.84 billion, up 4.1% from the previous year, and total stockholders' equity grew by 7.8% to $2.7 billion [5] Future Guidance - For Q1 fiscal 2025, Affirm forecasts GMV in the range of $7.1-$7.4 billion and revenues between $640-$670 million [6] - Management anticipates a GMV of over $33.5 billion for fiscal 2025, with revenues projected to expand as a percentage of GMV [7]