Will Affirm Be a Long-Term Winner in a Crowded Fintech Space?
While it used to be primarily associated with financing larger purchases like Peloton bikes, travel bookings or fancy electronics, AFRM is now teaming up with smaller, everyday buys. Its recent collaboration in low-ticket purchases includes Costco and World Market. This shift in strategy shows the company's aim to attract a wider audience and boost transaction volumes. Total transactions rose 45.6% year over year to 31.3 million in the third quarter of fiscal 2025 on the back of a significant surge in repeat customer transactions.
Affirm doesn't charge late fees, provides clear payment schedules and discloses interest rates upfront. This approach is appealing to young buyers who are cautious about credit. It is making investments in ML-driven underwriting and real-time decision making to ensure it maintains credit quality while broadening its reach. As of March 31, 2025, AFRM's active merchants were 358,000, up 23% year over year.
By striking a thoughtful balance between innovation and discipline, Affirm is working to solidify its position in both premium and everyday consumer financing. To outlast well-funded rivals, the company must grow profitably, build smart partnerships, navigate regulations and keep consumer trust intact.
How Are Competitors Faring?
Some of AFRM's competitors in the fintech space are PayPal Holdings, Inc. PYPL and Block, Inc. XYZ.
PayPal is a powerful player in the digital payments market with its Pay Later offerings, which directly compete with AFRM's business strategy. PayPal's 'Pay Monthly' targets high-ticket purchases, while 'Pay in 4' serves low-ticket, interest-free purchases. PayPal's net revenues increased 1% year over year to $7.8 billion in the first quarter of 2025.
Afterpay, owned by Block, is best known for allowing its customers to split their lower-ticket purchases into four interest-free payments. Block's Gross Payment Volume rose 4.4% year over year in the first quarter of 2025. The BNPL platform's Gross Merchandise Value grew 13% year over year in the same quarter.
Affirm's Price Performance, Valuation & Estimates
Over the past year, AFRM's shares have skyrocketed 133.3% compared with the industry 's rise of 38.3%.
From a valuation standpoint, AFRM trades at a forward price-to-sales ratio of 5.66, below the industry average of 5.81.
The Zacks Consensus Estimate for Affirm's fiscal 2025 earnings implies 101.8% growth from the year-ago period.
Affirm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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