What Happened?
Shares of buy now, pay later company Affirm (NASDAQ: AFRM) jumped 5.6% in the afternoon session after several analysts raised their price targets on the stock following the company's recent strong financial results. Among the firms updating their outlook, Mizuho increased its price target to $108 from $70, while maintaining an Outperform rating. Similarly, UBS raised its target to $85 from $56, keeping a Neutral rating. RBC Capital adjusted its price target upward to $97 from $75, and Stephens lifted its target to $93 from a previous $69. These upward revisions signal growing confidence from Wall Street in the company's financial performance and future prospects.
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What Is The Market Telling Us
Affirm’s shares are extremely volatile and have had 56 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 6.2% on the news that its key competitor, Klarna, announced plans to proceed with its long-awaited U.S. initial public offering. The Swedish “buy now, pay later” company announced it aims to raise up to $1.27 billion by selling over 34 million shares. As a major competitor to Affirm, Klarna's entry into the U.S. public markets signals intensifying competition in the financial technology space. This development may be prompting investors to reconsider Affirm's valuation, particularly after the stock's strong 40% year-to-date surge, with some analysts suggesting the stock had become relatively expensive even before this new competitive pressure emerged.
Affirm is up 45.2% since the beginning of the year, and at $90.73 per share, has set a new 52-week high. Investors who bought $1,000 worth of Affirm’s shares at the IPO in January 2021 would now be looking at an investment worth $933.56.
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