Affirm stock price forecast: technicals point to a drop to $10

August 24, 2023 09:00 PM PDT | By Invezz

Affirm stock price forecast: technicals point to a drop to $10 — Image source: Invezz

Affirm strong results

Affirm, the leading buy now, pay later (BNPL) company, released stronger-than-expected financial results. The company said that its Gross Merchandise Volume (GMV) during the quarter jumped to $5.5 billion, up from $4.4 billion in the same quarter in 2022.

This growth happened as the company continued adding new customers. Total active customers surged from 14 million to over 16.5 million. Transactions per consumer rose to 3.9, signaling that the company is seeing demand as interest rates rise.

Further numbers showed that Affirm’s revenue jumped from $364 million in Q4’22 to $446 million in Q4’23. The number of Affirm card customers has jumped sharply in the past few quarters.

Still, the biggest concern for Affirm is that profitability has been elusive. Its GAAP operating loss came in at $244 million while its adjusted income was $15 million.

A key concern among investors is the rising delinquency rate in the United States. The most recent data shows that credit card and other personal loans delinquency rate has been rising because of the rising interest rates.

Affirm’ s delinquency rate was better than expected. The 30-day rate dropped to 2.1% while the 60-day and 90-day rate was 1.2% and 0.5%. Asked about whether the rate will rebound later this year, the company’s CEO said:

“Seasonality. We know our borrower as well. We know when they have improvements to their personal cash flow, and we know when they struggle a little bit, and we are kind to be in front of that.”

Is Affirm stock a good buy?

Affirm and other BNPL companies thrived in the last decade because of the low-interest rate environment. Now, with interest rates at the highest level in a decade, there are concerns about the business model. For Affirm, this environment is complicated by its 0% APR rate.

Turning to the daily chart, we see that the Affirm stock price formed a double-top pattern at $19.81 in June and August. In price action analysis, this pattern is usually a bearish sign. The shares have dropped below the 25-day and 50-day moving averages.

They also remain above the ascending trendline that connects the lowest level on May 4th and August 18th. Therefore, despite the post-earnings pump, I suspect that the shares will resume the bearish trend in the coming days. If this happens, the next level to watch is at $10, ~27% below the current level.

The post Affirm stock price forecast: technicals point to a drop to $10 appeared first on Invezz.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.