Date: March 20, 2025
Type: Long
Conviction: Medium
Time Horizon: 1-3 months
Catalyst Profile: Market overreaction, strong fundamentals
The market has demonstrably overreacted to the recent Walmart news, creating a compelling entry point in a high-growth fintech leader. Affirm's agile strategic response through highly impactful partnerships and sustained robust underlying business momentum position it for significant rebound and continued expansion in the sector.
While the loss of Walmart exclusivity to Klarna was a significant headline, the subsequent ~45% stock decline by March 20, 2025, represents a disproportionate reaction given Affirm's diversified merchant ecosystem. Walmart was a notable partner, but not an existential one. Affirm maintains an extensive network of over 337,000 active merchants, including relationships with e-commerce giants like Amazon and Shopify. This broad base significantly mitigates reliance on any single retailer.
J.P. Morgan Payments Integration coming just days after the Walmart news, is a profound strategic win. It embeds Affirm's BNPL solutions directly into JP Morgan's vast payments network in the US, unlocking access to a massive new pool of merchants. This is a platform-level deal, far more impactful than a single merchant exclusivity agreement. Affirm's decision to begin furnishing information on all payment plans to Experian, addresses potential regulatory pressures but also strengthens Affirm's position as a legitimate and responsible financial partner, differentiating it from less transparent BNPL players. The Affirm Card continues to see strong traction expanding direct-to-consumer reach and facilitating in-store BNPL adoption, further diversifying revenue streams.
Q2 FY2025 results showcased strong GMV growth, and preliminary indicators suggested that March GMV growth accelerated to ~40% YoY. The company has been consistently beating EPS estimates and is on a clear trajectory towards sustained GAAP profitability, with a focus on disciplined underwriting and unit economics. This improves the quality of earnings and cash flows. Despite macroeconomic uncertainties, consumer demand for flexible payment options remains robust, particularly for 0% APR monthly installments, which Affirm offers effectively.
Intensifying competition, credit quality deterioration, and interest rate volatility.
Expect some DCA as there is bearish momentum.
The Walmart news negatively impacted Affirm, but should not have made it fall ~45% from the highs. Affirm’s diversified merchant ecosystem, new partnerships, and core metrics poise it to continue its growth trajectory, offering a compelling investment opportunity at these depressed levels.