'We Understand Street Frustration': 3 Affirm Analysts React To Noisy Q2 Earnings Report

Shares of Affirm Holdings Inc AFRM tumbled another 20% on Friday after a big Thursday sell-off as the company's revenue guidance disappointed the market.

On Thursday, Affirm reported a fiscal second-quarter EPS loss of 57 cents, a larger loss that the 32 cents per share analysts had projected. Revenue for the quarter was $361 million, beating analyst estimates of $328.8 million. Revenue was up 77% from a year ago.

Affirm's earnings were released earlier than planned on Twitter at around 1:30 p.m. ET. Affirm later said the tweet was an inadvertent posting due to human error.

Affirm also guided for full-year revenue of between $1.29 billion and $1.31 billion, beating analyst estimates of $1.27 billion. Investors were clearly hoping for more than the 5% guidance hike they got from Affirm.

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Voices From The Street: Morgan Stanley analyst James Faucette said Affirm exceeded expectations with gross merchandise volume (GMV), customer growth and usage.

"The bottom line is that right now an increasing proportion of Affirm's loans are currently moving towards interest-bearing, which has the impact of reducing near-term revenue vis-a-vis GMV (via lower MDRs), while increasing future revenue (via higher interest income)," Faucette wrote.

Credit Suisse analyst Timothy Chiodo said the high end of Affirm's fiscal 2022 GMV guide was unchanged despite the company adding its Amazon.com, Inc. AMZN business to its guidance.

"The F3Q guidance implies GMV down ~18% QoQ despite prospects for a continued ramp of large partners," Chiodo wrote.

Bank of America analyst Jason Kupferberg said the multiple moving parts of Affirm's guidance makes it difficult for investors to get a clear picture of the future.

"While we understand Street frustration with the multiple moving parts impacting the cadence of quarterly results, estimates continue to move up, and key concerns heading into earnings (credit, impact of stimulus expiration) did not show up in this print," Kupferberg wrote.

AFRM Ratings, Price Targets:

• Morgan Stanley has an Overweight rating and $140 target.
• Credit Suisse has a Neutral rating and $85 target.
• Bank of America has a Buy rating and $125 target.

Photo courtesy of Affirm.