Affirm's Tech Moat: Is Real-Time Underwriting the Differentiator?

Core Insights - Affirm Holdings, Inc. (AFRM) has differentiated itself in the Buy Now, Pay Later (BNPL) market by focusing on real-time underwriting as a core strategy, aiming to minimize defaults while providing consumer flexibility [1][4] - The company's proprietary data models assess each transaction based on multiple factors, allowing for continuous improvement in risk assessment and efficiency [2][8] - With over 13 years of underwriting experience and managing more than $100 billion in loans, Affirm has a significant advantage in predicting repayment behaviors across various credit profiles [3][8] Competitor Analysis - Competitors like PayPal Holdings, Inc. (PYPL) and Sezzle Inc. (SEZL) also employ robust credit risk management strategies, with PayPal blending initial underwriting with ongoing assessments to maintain high credit quality [5] - Sezzle's gross merchandise volume (GMV) increased by 74.2% year-over-year in Q2 2025, indicating strong performance in the BNPL sector [6] Financial Performance - Year-to-date, AFRM's shares have increased by 47.2%, outperforming the industry average rise of 18.4% [7] - The forward price-to-sales ratio for AFRM is 7.10, which is above the industry average of 5.62, indicating a premium valuation [9] - The Zacks Consensus Estimate projects a 433.3% growth in earnings for fiscal 2026 compared to the previous year, with a revenue growth estimate of 23.1% year-over-year [10]