Affirm Soars in Market Debut

Affirm’s AFRM stock soared more than 98% on Wednesday in its NASDAQ debut, nearly doubling the $49 initial public offering (IPO) price the company had set.

Affirm certainly has a good story: It’s a leading player among "buy now, pay later" providers who are looking to take market share from traditional credit card companies. Its sizable merchant network includes e-commerce players like Shopify SHOP and Peloton PTON. And it nearly doubled its annual revenue to $510 million for the fiscal year ended June 30.

“Public market investors are valuing BNPL providers as high-growth tech companies rather than traditional lenders,” explains Robert Le, a fintech analyst with Pitchbook, a Morningstar company.

“Favorable tailwinds for Affirm include an accelerated shift to e-commerce caused by the pandemic, BNPL’s growing in popularity (versus credit cards) among younger consumers, and low market penetration (only 3% of online sales) presenting plenty of room for growth,” he continues. “Its strong network effects will enable the company to acquire merchants and consumers more easily as it grows, further lowering its acquisition costs.”

Could the success of Affirm’s IPO lead other private fintech firms like Robinhood and Sofi to head to the public market soon?

"They're ripe and ready to exit," says Le.