How Affirm's Amazon Partnership Could Launch Stock Into High Orbit

Affirm Holdings, Inc. AFRM announced late Friday a partnership with Amazon, Inc. AMZN that has sent its stock soaring.

The Affirm Analyst: Mizuho Securities analyst Dan Dolev maintained a Buy rating on Affirm and upped the price target from $76 to $110.

The Affirm Takeaways: About 50% of Amazon shoppers will likely use Affirm's buy-now, pay-later offering, Dolev said, citing the results of a proprietary survey of over 200 of the e-commerce giant's customers in the U.S.

The survey also revealed that significant opportunity exists for Affirm to expand its customer base, given only 18% of U.S. Amazon shoppers are also customers of Affirm, the analyst said. 

This could drive 20%-30% potential upside to Affirm's medium-term gross merchandise volume, he said. 

Conservatively assuming about a 2% take rate implies a roughly $80-million to $110-million revenue opportunity, or 5%-10% of prior 2023 sales, Dolev said.

"We believe the sheer headline in partnering with the #1 US e-comm retailer could launch AFRM into higher orbit, making the fear of competition from Apple, Inc. AAPL Pay earlier this summer seem like a long-forgotten bad dream," the analyst said. 

AFRM Price Action: At last check, Affirm shares were up 41.8% at $96.28. 

Related Link: Where Affirm Holdings Stands With Analysts