Affirm Earnings Came In Cold: What Do Analysts Think About The Stock Now?

Affirm Holdings Inc AFRM topped off the earnings season for “buy now, pay later” and lending stocks with a disappointing report Wednesday — a possible indicator that the upcoming reports for other stocks in the sector may be just as sour.

When do other 'buy now, pay later' lending stocks report earnings?

• PayPal Holdings Inc PYPL reports on Feb. 8, after market close.
• Upstart Holdings Inc UPST will report on Feb. 14.
• Block Inc SQ will issue earnings on Feb. 23.

Affirm Earnings By The Numbers: The San Francisco-based company issued a loss per share of $1.10 for its fiscal second quarter of 2023, while analysts anticipated a loss of 98 cents per share. It also missed on revenue expectations as well, reporting $400 million for the quarter compared to consensus estimates of $416 million.

See Also: Why This DraftKings Analyst Is Turning Bearish Ahead Of Q4 Earnings

Affirm announced a cost-effective strategy that will see the exit of 19% of its workforce, and said headcount will be essentially flat for the foreseeable future.

The RBC Capital Markets Analyst: RBC’s Daniel Perlin downgraded Affirm to sector perform from outperform, and lowered the price target from $23 to $17.

“We believe the combination of higher funding costs, latency effects of pricing actions, and expected deceleration into FH2/23 GMV and revenues points to a more challenging environment ahead,” Perlin said in a Thursday downgrade note. “And, although management reiterated its commitment to achieving adj. operating income as the company exits FY23, we are slightly less convinced that it will be successful.”

The DA Davidson Analyst: While Affirm’s earnings were disappointing, Christopher Brendler reiterated buy rating on the stock, but lowered the price target from $24 to $20.

“In what we viewed as a critical quarter in AFRM's short history as a public company, Affirm failed to deliver, missing not only consensus but also the low end of the range across most guided metrics,” Brendler said. Yet, he is sticking with the stock as the lowered guidance sets the bar lower.

DA Davidson remains optimistic that Affirm’s pricing initiatives will improve top-line trends and the company will remain the long-term winner in the space.

Price Action: Shares of Affirm are trading 19.88% lower Thursday to $12.81, according to data from Benzinga Pro.