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Summary
- Affirm's going public has added to the competition level of the BNPL market.
- Affirm almost doubled in its IPO.
- The company will be a tough competition to ASX-Afterpay.
BNPL sector got a momentum ever since the beginning of the pandemic. The concept of 'Buy Now Pay Later' is clicked during a period when consumers were facing financial crunch and prefer to pay in instalments rather than making payment in one go. The industry is growing fast, and companies in this sector are coming with flexible payment options, helping both retailers and consumers.
Image source: Shutterstock
The latest to enter the competitive marketplace is Affirm Holdings Inc. The much-awaited IPO finally happened on 13 January 2021 at an initial value of more than USD 12 billion. The company is already successful in creating a lot of ripple in the market and taking the BNPL competition to the next level.
Upon listing, Affirm is now in direct competition with one of the leading Australian BNPL player Afterpay Limited (ASX:APT). On 14 January 2021, a day after Affirm's listing, APT was trading high and saw a growth of 9.74%.
Must read: BNPL Pioneer Afterpay (ASX:APT) Set To Join S&P/ASX 20 Index
A blockbuster entry to the market
The multimillion-dollar company, launched 10 years ago by PayPal co-founder Max Levchin, nearly doubled its public market debut. The US-based BNPL sold 24.6 million shares at USD 49 each to gain USD 1.2 billion. The company is a new generation firm benefiting from recent finance, e-commerce, retail, and technology trends. The platform is eyeing the young population of America.
Affirm is on growth trajectory:
The instalments loan provider company is performing robustly. For the financial year ended on 30 June 2020, the revenue was nearly USD 509.5 million, an increase of 93% on PCP when the revenue was at USD 264.4 million. For three months ended on 30 September 2020, the revenue was almost USD 174.0 million, a year-over-year growth of around 98%.
As per company's data by 30 September 2020, the platform facilitated nearly 17.3 million transactions involving over 6.2 million consumers and more than 6,500 merchants, resulting in a Gross Merchandise Volume (GMV) of almost USD 10.7 billion transacted through Affirm since 1 July 2016.
Affirm is all set to capitalise the recent megatrends in the market that transform the dynamics between consumers and merchants and give considerable opportunities in the transaction process. The company is going by the pulse of the market. The favourable circumstances include the continuously growing BNPL market and booming e-commerce space.
Plan ahead!
With listing successfully and having financial support from Wall Street, the company is now better placed and free to engage in aggressive acquisitions for growth.
