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Affirm Stock Soars 15% on Earnings Beat

Affirm Stock Soars 15% on Earnings Beat

 Affirms Stock Soars 15% on Earnings and Revenue Beat: What Investors Need to Know

Digital illustration of Affirm Holdings stock

Key Takeaways

  • Strong Financial Performance: Affirm Holdings reported a fiscal Q4 2025 earnings per share of 20p, nearly double Wall Street’s expectations, with revenue hitting £876 million, up 33% year-over-year.
  • Stock Surge: AFRM shares jumped 15-16.33% in after-hours trading, reflecting investor confidence in Affirm’s growth and profitability.
  • Gross merchandise volume reached £10.4 billion, up 43%, reflecting growth in both user activity and merchant participation.
  • Positive Outlook: Affirm projects Q1 2026 revenue between £855-£885 million, reinforcing its path to sustained profitability.
  • Competitive Landscape: Despite partnerships with Amazon and Shopify, Affirm faces challenges from competitors like Klarna and shifting retail dynamics.

Introduction: Why Affirms Stock Is Making Headlines

Imagine checking your investment portfolio and seeing one of your holdings skyrocket by 15% overnight. That’s exactly what happened to Affirm Holdings (NASDAQ: AFRM) investors on 29 August 2025, after the company released its fiscal fourth-quarter results. The buy now, pay later (BNPL) giant not only smashed Wall Street’s earnings and revenue expectations but also signaled a bright future with strong guidance. So, what’s driving this surge, and should you consider jumping on the Affirm bandwagon? Let’s dive into the details behind Affirm’s impressive performance and explore what it means for investors.

Understanding Affirm’s Blockbuster Earnings

Q4 2025: A Stellar Performance

Affirm’s fiscal fourth-quarter results for 2025 were nothing short of remarkable. The company reported an earnings per share (EPS) of 20p, almost double the 11p anticipated by analysts, according to LSEG consensus estimates. Revenue for the quarter reached £876 million, surpassing expectations of £837 million and marking a 33% increase from £659 million in the same period last year.

This performance wasn’t a one-off fluke. Affirm’s gross merchandise volume (GMV), a key metric reflecting the total value of transactions processed on its platform, soared 43% to £10.4 billion from £7.2 billion a year ago. This growth highlights Affirm’s ability to capture more consumer spending and expand its merchant network.

Breaking Down the Numbers

To put Affirm’s success into perspective, let’s look at the key financial highlights:

  • Earnings Per Share: 20p vs. 11p expected, a 81.8% beat.
  • Revenue: £876 million vs. £837 million expected, up 33% year-over-year.
  • GMV rose 43% to £10.4 billion, from £7.2 billion.
  • The company posted a net income of £69.2 million, rebounding from a £45.1 million loss the previous year.
  • RLTC climbed 37% to £425 million, or 4.1% of GMV, beating long-term targets.

These figures demonstrate Affirm’s ability to not only grow its top line but also improve profitability, a critical factor for investors eyeing long-term value.

Why Affirm’s Stock Jumped 15%

Market Confidence in Profitability

The company’s Q4 2025 operating income profitability acted as a key catalyst, pushing the stock up 15–16.33% in after-hours trading. The company achieved this milestone “right on the schedule we committed to a year ago,” according to its shareholder letter, signaling disciplined cost management and operational efficiency.

Investors were particularly encouraged by Affirm’s commitment to maintaining GAAP profitability moving forward. CEO Max Lev chin emphasized, “Profitability is a point in the journey, not the destination,” highlighting the company’s focus on sustainable growth and innovation.

Strong User and Merchant Growth

Active users hit 23 million (+24%), transactions per user up 20%, while the Affirm Card saw 132% higher volumes and 187% more in-store spending. This indicates that consumers are increasingly adopting Affirm’s flexible payment solutions, both online and in physical stores.

On the merchant side, Affirm’s partnerships with major players like Amazon and Shopify continue to fuel growth. However, competition is heating up, with Walmart recently shifting to rival Klarna, which is gearing up for an IPO. Despite this, Affirm’s integration into four of North America’s top digital wallets by the end of 2025 positions it well to capture market share.

Comparing Affirm’s Performance to Industry Peers

To understand Affirm’s success, it’s worth comparing it to other players in the fintech and BNPL space. For context, let’s look at a similar case: Deere & Company (DE), a leader in agricultural equipment, saw its stock rise 7% after beating earnings expectations in Q2 2023, driven by strong demand and pricing power. While Deere operates in a different sector, its stock movement reflects how exceeding analyst forecasts can boost investor sentiment, much like Affirm’s recent surge.

Unlike Deere, Affirm operates in the fast-evolving BNPL sector, competing with companies like Klarna and After pay (owned by Block, Inc.). Affirm’s 43% GMV growth outpaces After pay’s reported 20% GMV increase in its latest quarter, showcasing Affirm’s stronger momentum. However, Klarna’s upcoming IPO and Walmart partnership pose challenges, making it critical for Affirm to maintain its competitive edge through innovation and strategic partnerships.

What’s Next for Affirm: Q1 2026 Guidance

Revenue and GMV Projections

Affirm’s guidance for Q1 2026 further bolsters investor confidence. The company expects revenue between £855 million and £885 million, with a midpoint of £870 million, slightly above the consensus estimate of £858.4 million. GMV is projected to remain robust at £10.1 billion to £10.4 billion, reflecting sustained consumer demand and merchant adoption.

Strategic Initiatives

With 1.7 million active users, the Affirm Card has grown 136% year-over-year, reflecting significant consumer uptake. The card’s attach rate (the percentage of transactions using the card) reached 10%, driven by a 187% surge in in-store spending. Data shows Affirm is successfully connecting online and offline transactions. a key differentiator in BNPL.

Additionally, Affirm’s partnerships with major e-commerce platforms and its expansion into digital wallets position it to capitalize on the growing trend of flexible payment options. However, investors should keep an eye on macroeconomic factors, such as consumer spending trends and potential interest rate changes, which could impact BNPL demand.

Opportunities and Challenges for Affirm

Opportunities in the BNPL Market

Consumers’ love for flexible payment options is driving a boom in the BNPL sector. Affirm’s strong performance in categories like travel (up 42% during Black Friday/Cyber Monday) and third-party marketplaces (up 44%) highlights its ability to capture seasonal spending. With 23 million active users and growing, Affirm is well-positioned to benefit from the projected £1.2 trillion global BNPL market by 2030.

Key opportunities include:

  • Expanding Merchant Network: Partnerships with Amazon, Shopify, and others drive GMV growth.
  • Affirm Card Adoption: The card’s rapid growth enhances user engagement and transaction frequency.
  • Digital Wallet Integration: Native integration into top digital wallets by late 2025 will boost accessibility.
  • Profitability Focus: Achieving GAAP profitability by Q4 2025 strengthens investor trust.

Challenges to Watch

Despite its success, Affirm faces several challenges:

  • Competition: Klarna’s Walmart partnership and upcoming IPO intensify competition in the BNPL space.
  • Economic Sensitivity: Affirm’s business is tied to consumer spending, which could be affected by economic slowdowns or tariff policies, as seen in Q1 2025 when U.S. consumer spending contracted due to Trump’s tariffs.
  • Credit Risk: While Affirm’s core offering maintains losses below 1%, rising interest rates or consumer defaults could pose risks.

How Investors Can Approach Affirm Stock

Is Now the Time to Buy?

Affirm’s stock has been a rollercoaster, up 31% year-to-date before the 15% after-hours surge on 29 August 2025. AFRM has jumped 92.01% over the past year, closing at £79.99, outpacing the Nasdaq’s modest 12% growth. However, its volatility—down 27.79% in the last three months—suggests caution.

Wall Street remains mostly bullish, with an average analyst target price of £70.79, implying 15% upside from its 6 February 2025 close. With a 12-month gain of 92.01% to £79.99, AFRM has significantly outperformed the Nasdaq, which rose 12% over the same period.

Practical Tips for Investors

  • Research Affirm’s Financials: Dive into Affirm’s investor relations page for detailed earnings reports and shareholder letters.
  • Track competitors like Klarna and After pay to measure Affirm’s market penetration and competitive strength.
  • Assess Macro Trends: Watch consumer spending and interest rate movements, as they directly impact BNPL demand.
  • Diversify Your Portfolio: Consider pairing AFRM with other fintech stocks like Block (SQ) or Upstart (UPST) to spread risk. Explore our guide to fintech investing.
  • Stay Informed: Subscribe to financial news outlets like CNBC or Investing.com for real-time updates.

Learning from Past Performance

Affirm’s stock has a history of reacting strongly to earnings beats. For example, on 7 February 2025, AFRM shares soared 18% after reporting a surprise Q2 profit of 23p per share and £866.4 million in revenue, beating forecasts. Similarly, in November 2023, the stock jumped nearly 25% after exceeding GMV and revenue expectations. These patterns suggest that Affirm’s ability to outperform analyst estimates consistently drives investor enthusiasm.

However, not every quarter has been a win. In May 2025, Affirm’s stock fell 8% after issuing weaker-than-expected revenue guidance, despite beating earnings estimates. This highlights the importance of forward guidance in shaping market sentiment.

The Bigger Picture: Affirm’s Role in Fintech

Founded in 2012 by PayPal co-founder Max Lachin, Affirm has grown into the largest U.S.-based BNPL lender, processing £28 billion in payments annually across 22 million users. Affirm lets users access installment loans, payment links, and virtual or physical cards, making money from merchant fees and interest. By avoiding late fees, it resonates strongly with Gen Z and Millennial consumers.

The company’s five-year compounded annual growth rate of 44.6% Underscores ongoing revenue expansion, well ahead of the industry norm. However, its two-year annualized growth of 42.5% suggests a slight slowdown, potentially due to macroeconomic headwinds or increased competition.

Conclusion: Should You Invest in Affirm?

Affirm’s 15% stock surge on 29 August 2025 underscores its strong fundamentals and growth potential in the BNPL market. With 33% revenue growth and 43% GMV increase, Affirm shows it can thrive in a competitive landscape. market. However, challenges like rising competition and economic uncertainties warrant careful consideration.

For investors, Affirm presents an exciting opportunity, but it’s not without risks. If you’re bullish on the BNPL sector and believe in Affirms ability to innovate, now could be a good time to explore AFRM stock. Start by researching its financials, monitoring competitors, and staying updated on market trends. Ready to dive deeper? Check out our guide to investing in growth stocks or visit Yahoo Finance for the latest AFRM updates.

Call to Action: Are you considering investing in Affirm or other fintech stocks? Share your thoughts in the comments below and subscribe to our newsletter for more investment insights!

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