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After surging 65% from the Nov. 22 close on investor optimism for the holiday shopping season, Affirm Holdings (NASDAQ:AFRM) stocks took a breather on Monday, falling 5.1%.
US Consumers Drive Black Friday Shopping to Record $9.8 Billion, Adobe Says Analytics, 7.5% more than a year ago. And that's good news for buy-now-pay-later financing providers like Affirm (AFRM).
Adobe Analytics said $79 million of Black Friday online sales opted for BNPL payment options, a 47% year-over-year increase.
At an industry conference on Monday, Affirm (AFRM) Senior Vice President of Finance Robert O'Hare explained that the company typically experiences some compression in revenue as a proportion of gross merchandise value in the second quarter, as that the company makes provisions for current expected credit losses. when it makes the loans, which will “increase the amount of costs we have against that GMV… it will take a quarter, two or three for the interest income to hit the loans.”
He also said he believes the company has outperformed profitability, with Affirm (AFRM) “just north of breakeven on the bottom line” over the past 12 months. But at the same time, “we want to make sure we leave room in the P&L from an expense perspective to invest in things like the U.K. and some other new markets and opportunities that are currently developing,” O'Hare said.
The United Kingdom will be its first step in international expansion beyond the United States and Canada. Australia is not as attractive because it “does not have the same potential for interest-bearing loans as the UK.”
