Should You Buy Affirm While It's Below $85?

Core Insights - Affirm has experienced significant stock appreciation, with a 677% increase since the start of 2023, and a recent surge of over 20% following strong earnings results [2][1] - The company is capitalizing on the growing popularity of Buy Now, Pay Later (BNPL) services, particularly among younger consumers, which has led to impressive growth metrics [1][4] Company Performance - In the most recent quarter, Affirm reported a 35% growth in gross merchandise volume (GMV) and a 47% increase in revenue year-over-year, positioning it as one of the fastest-growing companies in the fintech sector [4] - Affirm's partnerships with major merchants like Amazon and Apple are expected to further enhance its revenue growth, particularly with the integration of BNPL services into Apple Pay [5] Business Model and Sustainability - Affirm's business model focuses on individual loans for each transaction, helping consumers avoid high-interest debt, with only 28% of its products being interest-free loans [3][6] - The company has increased its lending capacity to $22.6 billion from$15.5 billion year-over-year, indicating strong demand and trust from debt investors [7] Financial Health - Affirm maintains a robust balance sheet with $1.8 billion in cash and generated over$600 million in free cash flow in the past year, reflecting its financial stability [8] - The company is building additional revenue streams, such as the Affirm Card, which has reached 1.7 million users, enhancing its presence in everyday transactions [6] Market Position and Valuation - CEO Max Levchin envisions Affirm as a diversified financial company akin to American Express, with Affirm's revenue growth of 46% compared to American Express's 10% year-over-year growth justifying a higher valuation [10] - Given the accelerating growth and potential from Apple Pay integration, Affirm's stock is considered a solid long-term buy despite its volatility [11][12]