Shares of Affirm Holdings Inc. experienced a significant surge as the company announced an expansion of its services with retail giant Walmart Inc. Affirm, a provider of buy-now-pay-later options, will now offer its transparent monthly pay-over-time choices at self-checkout kiosks in over 4,500 Walmart stores across the U.S. This new collaboration aims to empower consumers by enhancing their purchasing power throughout the holiday season and beyond.
According to Pat Suh, Senior Vice President of Revenue at Affirm, this partnership will enable even more customers to benefit from the flexible payment options and further highlights Affirm's dedication to providing seamless financial solutions. Additionally, in addition to in-store and online purchases, Affirm's services will extend to Walmart Vision and Walmart's auto centers.
As a result of this news, Affirm's stock soared by an impressive 14% during morning trading. If this upward trend continues, it will mark the highest close for Affirm since February 2, 2022. Conversely, Walmart shares experienced a slight dip of 0.4% during this period.
Interestingly, this rally in Affirm's stock also had a positive impact on other buy-now-pay-later service providers. Block Inc. saw a notable climb of 4.5% towards its highest closing price since August 1. Analyst James Friedman from Susquehanna reaffirmed his positive outlook on Block Inc., emphasizing the potential for increased profitability. His price target of $100 remains one of the highest among the 50 analysts surveyed by FactSet.
With the expanding popularity of buy-now-pay-later options, the partnership between Affirm and Walmart represents a significant step forward in providing convenient and flexible payment solutions for customers across various retail sectors.
Affirm's Stock Surge
Affirm, the popular buy-now-pay-later platform, experienced a significant surge in its stock price on Tuesday, reaching a three-month high. Despite a slight dip in the previous day following a downgrade by Morgan Stanley analyst James Faucette, the stock quickly rebounded.
Faucette's concerns were primarily centered around valuation, leading him to lower his rating on Affirm's stock from equal weight to underweight. His price target of $20 indicates a potential downside of 60% from the current levels. While he acknowledged Affirm's strong performance across various initiatives, Faucette deemed the current valuation as untenable, with risks outweighing potential rewards.
Despite Faucette's downgrade, Affirm's stock has enjoyed considerable success since its IPO in January 2021. So far this year, the stock has skyrocketed by a staggering 415%, driven by the increasing adoption of buy-now-pay-later options during the holiday shopping season. Remarkably, this impressive growth comes after the stock plummeted by 90.4% in 2022 due to the negative impact of rising interest rates on consumer spending.
Recent positive sentiments regarding Affirm's stock have also emerged. J.P. Morgan analyst Reginald Smith expressed his belief that the company deserves a "premium" valuation, citing sustained growth, improved profitability, and strong credit performance. However, despite acknowledging these positive aspects, Smith maintained a neutral rating and suggested that the stock may need a breather due to its significant rally and resulting valuation concerns.
In conclusion, Affirm's recent surge in stock price, coupled with differing opinions from analysts, highlights the ongoing debate regarding the company's valuation and its potential for sustained growth.
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