Now isn’t the time to buy, pay later company Affirm, according to Wedbush. Analyst David Chiaverini started Affirm with an underperform rating and a price target of $15 per share, down about 40% from Tuesday’s close. “We are concerned about Affirm’s path to GAAP profitability, increasing competition in the Buy Now, Pay Later (BNPL) space, industry forecasts calling for slower e-commerce sales (which contribute to Affirm’s gross trading volume). , or GMV), and its ability to cover its cost of capital as the cost of funding increases,” Chiaverini wrote in a note on Tuesday. The confirmation became public in January 2021 as consumers, fueled by excess cash from various government stimulus packages, increased spending. The company’s public market debut also coincided with a sharp jump in US economic activity following the start of the Covid-19 pandemic. This, coupled with historically low interest rates and unprecedented monetary stimulus from the Federal Reserve, sent the stock more than 100% in its first year. However, this year has been a different story. Confirmed shares are down more than 75% this year and are trading more than 86% below the highs they set in early November, as the economy slows and the Fed raises rates to stem a sharp rise in inflation. “The recession could lead to increased unemployment, which could have a negative impact on consumer demand and credit metrics,” the analyst said, adding that Affirm “has yet to take much action in response to the rising rate environment”. …seeing that over the long term (more than 1 year), Confirmation may have to take some action on the Fee/Consumer APR side of the business to remain competitive.” Chiaverini also noted that Affirm may also face pressure from increased competition in the buy now, pay later location, adding that “traditional consumer finance companies have developed their own point-of-sale and post-sale installment lending products.” presented to.” Not to mention a new formidable competitor that came out this week. “Apple also recently announced its pay-in-four product, which increases the competitive threat,” wrote the analyst. “The firm’s pay-in-four product, which accounted for 20% of GMV in the most recent quarter and is the fastest-growing segment, is notably shrinking margins and big traders bargaining hard on economics.” —CNBC’s Michael Bloom contributed to this report.
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