Affirm Holdings (AFRM) holdings surges after Analyst gets bullish

Affirm Holdings (AFRM) has recently emerged among investor circles. AFRM stock has surged more than 13% the previous week on news that a major analyst has turned bullish on the stock.

BofA Securities analyst Jason Kupferberg upgrades the stock to Buy from Neutral as he says consensus estimates for 2021/2022 gross merchandise value and revenue seem too low given the growth potential for its Shopify relationship and momentum in non-Peleton business.

The analyst also notes that key unit economics are trending well; i.e., revenue less transaction expenses as a percent of GMV trending ~5% vs. ~3.5% target. He also sees AFRM’s model as “favorably differentiated” in the highly competitive “Buy Now, Pay Later” space as it offers a wide range of loan products as well as other platform features, such as a savings account and the soon-to-be-introduced Affirm Card.

One thing to note is that a near term risk is that the lockup period will end soon which represents 50% of fully diluted shares.