Core Viewpoint - Affirm Holdings, Inc. is recognized as a promising FinTech stock for 2026, but Wolfe Research maintains a cautious stance due to valuation concerns despite the presence of multiple growth drivers [1][4]. Growth Drivers - The increasing adoption of 0% APR installment loans is a significant growth factor, as merchants prefer promotional financing over upfront discounts, allowing them to maintain margins while enhancing conversion rates [2]. - The development of the Affirm Card is another key growth lever, enabling consumers to use Affirm's pay-over-time functionality for everyday spending, which boosts engagement and transaction frequency [3]. - Affirm's international expansion, particularly into European markets, presents a long-term opportunity to diversify revenue streams [3]. Valuation Concerns - Wolfe Research initiated coverage with a price target range of $72 to $82, indicating that much of the anticipated operational progress is already priced into the stock, leading to a constrained upside potential without a reset in valuation expectations [4].

Core Insights - Affirm experienced significant growth in 0% APR installment volumes, which increased by 74% as over 40,000 merchants offered interest-free options, enhancing value for both merchants and consumers [1][7] - The company reported a 42% growth in gross merchandise volume (GMV), reaching $10.8 billion, with nearly half of this growth attributed to direct merchant integrations and a third from direct-to-consumer channels [1][3] - Affirm's partnership with Amazon has been extended for an additional five years, solidifying a key relationship for future growth [2] Financial Performance - Gross merchandise volume rose 42% to $10.8 billion, while revenue increased by 34% to $933 million [3] - Direct-to-consumer GMV surged by 53% to $3.2 billion, driven by a 135% increase in Affirm Card volume to $1.4 billion [5] - Active consumers grew by 24% to 24.1 million, with transactions per active consumer rising from 5.1 to 6.1 [9] Market Expansion - The number of merchants increased by 30% to 419,000, indicating strong momentum in the market [8] - Wallet partners contributed over $7 billion in GMV, reflecting a nearly 70% increase [8] - Affirm's funding capacity rose to $26.6 billion, supporting over $60 billion in annual GMV, with projections for fiscal 2026 exceeding $47.5 billion [9] Consumer Insights - Affirm's consumer base is healthy, with low delinquency and default rates, tracking to less than 1% of GMV for recent Pay in 4 loans [8] - The company is focusing on expanding access to younger consumers and those typically overlooked by traditional credit systems [6]