BNPL Lender Affirm shares fall after gloomy full-year earnings forecast

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By Manya Saini and Mehnaz Yasmin

(Reuters) – Shares of Affirm Holdings Inc fell 11% in morning trade on Friday after the lender buy now, pay later forecast full-year revenue below Wall Street estimates, underscoring the slowdown wider of the fortunes of the former high-flying fintech sector.

Rising rates, geopolitical turmoil and an industry-wide sell-off in high-growth tech stocks have together hit investor sentiment, driving the company’s market capitalization down billions with shares falling by almost 70% so far this year.

“Given the uncertain macroeconomic environment, we are approaching our next financial year with caution,” said Chief Financial Officer Michael Linford.

Affirm said Thursday it expects full-year 2023 revenue to be between $1.63 billion and $1.73 billion, below estimates of $1.9 billion, according to data from Refinitiv.

“The company’s guidance calls for revenue growth to slow to 37% from 87% in FY23 due to a combination of tough comparisons and tighter underwriting standards,” Kevin Barker told Reuters. , managing director of Piper Sandler, covering consumer finance and mortgage companies.

The fintech is also among the top trending tickers on the retail investor-focused forum StockTwits on Friday, with post volumes up more than 200% on the stock.

Searing inflation has also played spoilsport for consumer finance companies as soaring costs reduce purchasing power, forcing Americans, especially those on low incomes, to tighten their purse strings. .

The company said it expects first-quarter revenue to be between $345 million and $365 million, below analysts’ expectations of $386 million.

“There is no competitive moat for this company and Affirm’s results have proven that. The pie might increase, but the number of players competing for slices has also increased,” said Thomas Hayes, President. and Managing Member of Great Hill Capital.

Affirm trades at a premium to its net worth and is moderately valued compared to peers Block Inc and PayPal Holdings Inc.

(Reporting by Manya Saini and Mehnaz Yasmin in Bengaluru; Editing by Krishna Chandra Eluri)

Copyright 2022 Thomson Reuters.

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