Mobile fintech company Affirm (NASDAQ:AFRM) is currently in the midst of a brutal pullback following its disappointing second-quarter earnings call. Right now, AFRM stock is down more than 17% after releasing Q2 2022 results. Despite it reporting strong consumer growth, the widening net loss has clearly spooked investors.
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What do you need to know about Affirm’s late-week tumble?
Affirm had a mixed-bag earnings report for Q2 fiscal 2022, which ended on Dec. 31, 2021. The tech-forward payment company confidently announced a 77% increase in revenue to $361 million. This was on top of 150% year-over-year (YOY) active consumer growth. However, that was seemingly a moot point to investors, who clearly seemed more concerned with the net loss of $159.7 million. This loss was a 500% increase from the prior-year loss of $26.6 million.
Affirm founder and CEO Max Levchin commented on the report, opting to look on the bright side:
“Millions of people see Affirm as a smart way to pay because of our honest, transparent, and customizable payment terms. Merchants recognize our ability to help them drive growth and deliver the experience consumers are demanding at checkout. We remain focused on extending our lead as we scale enterprise partnerships and benefit from self-reinforcing network effects. With our talented team of Affirmers, we have never been more excited to expand the impact of our mission.”
Unfortunately, despite the company’s focus on growth, it wasn’t enough to save AFRM stock from harsh investor retaliation. So, what else is going on with Affirm lately?
AFRM Stock Tumbles as the Company Zeros in on Buy-Now-Pay-Later
Affirm is one of the biggest players in the buy-now-pay-later (BNPL) space, something its latest report was unafraid to highlight. More than a third of Affirm’s revenue comes from interest payments from customers of its sometimes 60-month-long BNPL plans. In fact, the company is set to be the only provider of BNPL services to Amazon (NASDAQ:AMZN) until January 2023, a strong short-term benefit.
Among Affirm’s recent business highlights includes the launch of its new SuperApp and accompanying browser extension. Released in late January, the SuperApp hosts the entire suite of Affirm’s shopping, payment and other financial services. The browser extension also allows nearly universal use of the company’s payment options.
Since its initial public offering (IPO) last year, Affirm has been on something of a rollercoaster. AFRM stock reached its peak-high share price of $176.65 back in November but was hit hard by the tech pullback this past January. Currently, the stock is trending closer to $50 after today’s drop.
The BNPL wave continues to gain momentum, though that may not be enough to convince AFRM stock shareholders of its long-term viability. It remains to be seen how best the company can leverage its growing customer base.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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