Affirm Raises $1.2B, Pricing Above Range In Hot IPO Market

Online lender Affirm Holdings Inc. AFRM has raised roughly $1.2 billion by pricing its initial public offering (IPO) at $49 per share, above the expected range of $41 to $44, the company announced Tuesday. 

What Happened: Affirm is a fintech company providing installment loans to online shoppers and is led by PayPal Holdings Inc PYPL co-founder Max Levchin.

The IPO values Affirm at $11.9 billion based on outstanding shares. Its fully diluted valuation, including options and restricted stock units, is about $15 billion, as per Bloomberg.

The company is set to begin trading on the Nasdaq under the symbol “AFRM” on Wednesday.

Affirm is one of the first in a list of several companies to go public this year. Affirm’s IPO shows that the market is hot for tech companies, continuing from 2020, which saw businesses raise more than $159 billion.

Affirm was founded in 2012 by Max Levchin. The PayPal co-founder is the second-biggest shareholder in Affirm, according to filings.

Why It Matters: Affirm is popular among online merchants, with more than 6,500 using the platform according to the company’s prospectus.

Affirm offers a “buy now, pay later” product that appeals to online shoppers for buying big-ticket items and spread out payments. In return, Affirm charges merchants a fee, the Financial Times reports. 

Affirm makes most of its money from merchant fees, which results in customers paying zero interest. It also offers interest-based loans without late fees.

A chunk of Affirm’s business comes from sales through fitness company Peloton Interactive Inc PTON, accounting for 28% of its 12-month revenue through June 2020.

Affirm clocked a revenue of $510 million for 12 months through June 2020 and reported losses of $113 million.

A boom in online shopping has led to the popularity of Affirm. However, it’s a competitive space with established players like PayPal offering similar buy now, pay later options.

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