Affirm Secures $4 Billion Loan Deal With Sixth Street to Boost BNPL Growth

On Friday, fintech company Affirm Holdings, Inc AFRM stock gained after the company announced a long-term capital partnership with Sixth Street to invest up to $4 billion in Affirm loans. The stock gave up the gains in the trading session.

Through its Asset Based Finance platform, Sixth Street will invest up to $4 billion by purchasing Affirm loans in a unique AssetCo structure pursuant to a three-year forward flow agreement.

The transaction represents the most significant capital commitment Affirm has secured to date.

Also Read: Apple’s AirPods Production Shifts To India: Foxconn Will Begin Manufacturing In 2025

It provides additional off-balance sheet funding, allowing Affirm to extend up to more than $20 billion in loans over the next three years as the company continues to scale its payment network.

In October, SoFi Technologies, Inc SOFI announced a $2 billion loan deal with funds managed by Fortress Investment Group to develop SoFi’s capabilities in its loan platform business.

Affirm reported its first-quarter revenue of $698.47 million versus $496.54 million a year ago, which topped the analyst estimate of $664.01 million. EPS loss of 31 cents beat the consensus loss estimate of 35 cents. Affirm expects second-quarter revenue of $770 million and $810 million.

JPMorgan’s Reginald L. Smith flagged a $65 billion leap in the fintech sector’s market cap since mid-September, backed by third-quarter results, rate cuts, and post-election tailwinds. Smith called Kaspi KSPI, Affirm, and Shopify Inc SHOP the top fintech winners.

Affirm continues to leverage the growing popularity of Buy Now, Pay Later (BNPL) services by strengthening its partnerships with Amazon.com Inc AMZN, Apple Inc AAPL, and Shopify Inc SHOP.

Smith emphasizes Affirm’s robust credit metrics and dependable funding sources as distinguishing factors. The company aims for profitability by fiscal year 2025.

Affirm Holdings stock surged 50% year-to-date. Investors can gain exposure to the stock through Amplify Digital Payments ETF IPAY and Amplify ETF Trust Amplify Online Retail ETF IBUY.

Price Action: AFRM stock is down 1.31% at $67.87 at last check on Friday.

Also Read: