Affirm has been sliding. Buy it now, Wolfe Research says

Wolfe Research Sees Opportunity in Affirm’s Decline, Recommends Buy for Long-Term Investors

Imagine you’re at a yard sale and spot a great bike that’s a little dusty. Some people walk by, but you know it’s a solid deal if you look past the dirt. That’s how some experts feel about Affirm Holdings right now.

Why This Matters for Investors

Affirm is a company that lets people buy things now and pay for them later, kind of like a modern layaway. Lately, its stock price dropped, even though it just had a strong quarter. This could be a good chance for investors to buy shares at a lower price before they go up again. If you own stocks or want to add new companies to your portfolio, it’s important to know what’s going on with Affirm and others like it.

The Bull Case: Reasons to Be Positive

  • Strong Growth: Affirm is growing fast, especially in its “buy now, pay later” business. It’s adding more users and more stores are using its service.
  • Good Execution: The company is doing what it says it will. Its “Affirm Card” is becoming more popular, and more people are using its 0% interest plan.
  • Room to Grow: Affirm could expand to other countries and offer more types of services, giving it even more ways to make money.
  • Analyst Support: Out of 37 analysts who cover Affirm, 29 say it’s a “buy” or “strong buy,” according to LSEG data.
  • Still Growing Market: The buy now, pay later market is expected to grow at a rate of over 26% per year through 2030, according to Grand View Research.

The Bear Case: Reasons to Be Careful

  • Competition: There are lots of companies in the buy now, pay later space, like Klarna and Afterpay. This could make it harder for Affirm to keep growing fast.
  • Stock Price Drop: Affirm’s shares have fallen about 8% since late August, while the S&P 500 and competitors like Klarna are down less than that.
  • Economic Worries: If people start spending less or can’t pay their bills, Affirm could lose money or see growth slow down.
  • Regulation: The government is looking more closely at buy now, pay later companies, which could mean new rules or costs.
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What’s Next for Affirm?

Analysts at Wolfe Research just upgraded Affirm to “outperform,” which means they think it will do better than other similar companies. They set a price target of $90, which is 26% higher than where the stock closed last Friday. They like how Affirm keeps winning new stores, growing its user base, and might soon expand to more countries and new business areas.

Even though there’s tough competition, Affirm is still gaining market share and keeping users happy. The company is also working on new tools like “Affirm Edge” and exploring ways to make shopping easier for everyone.

Investor Takeaway

  • Look at Affirm if you want exposure to the fast-growing buy now, pay later market, but remember the risks.
  • Watch for signs that Affirm is expanding into new countries or new kinds of businesses, as this could boost the stock.
  • Keep an eye on the competition and any new government rules that could affect how Affirm does business.
  • If you already own Affirm, think about whether you believe in its long-term growth story before buying more or selling.
  • Diversify your investments so you’re not too exposed to any one company or sector, especially in fast-changing markets like this one.

For the full original report, see CNBC

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