Affirm’s (AFRM) Next Chapter Bets Big On The Card

Affirm, the fintech company, delivered its most profitable quarter ever in August, yet its stock price dropped by 4.26% during the earnings call. Founder and CEO Max Levchin announced his stepping back from daily operations to focus on new products, while the existing business continues to expand. The Affirm Card is the new growth engine, with a 19% attach rate among active users, who spend twice as much on the network compared to the average user.

A significant 30% of transactions occur offline, presenting a major opportunity for in-store point-of-sale. Rewards are delivered through merchant-funded 0% programs, offering more value than traditional cash back options. Merchants' Pay-in-X volume grew by 41%, and the Services vertical nearly doubled in volume after integrating with major platforms.

Despite being present in only 10% of e-commerce merchants and 80% of the top 250 US e-commerce sites, Affirm views this as an expansive opportunity. Fiscal 2027 guidance predicts revenue less transaction costs of 4.2%, maintaining a similar pace to fiscal 2026. CFO Rob O'Hare noted the volatility of the long-term GAAP tax rate, and the company's shift to interest-bearing loans raises the stakes on its underwriting science.

While the stock trades at a forward P/E of 40.16, suggesting strong near-term numbers, the uncertainty surrounding the company's long-term growth and underwriting challenges presents a balancing act for investors.