Affirm Holdings Inc. (AFRM), the buy-now-pay-later (BNPL) giant, is trading at $77.99 in today's pre-market session, reflecting a marginal gain of $0.40 (0.52%) from yesterday's close.
The stock is hovering near a critical resistance level of $80 as investors eagerly anticipate the company's Q4 2025 earnings report, scheduled for release after market close today.
The question now is whether Affirm's stock price can break through this ceiling and sustain a rally, or is a pullback on the horizon?
The stock has enjoyed a robust performance in recent months, trading significantly above both its 50-day and 200-day simple moving averages (SMAs), currently at $56.53 and $55.19 respectively.
Affirm's recent earnings reports have also contributed to investor confidence. In the fiscal quarter ending March 31, 2025, the company reported earnings per share (EPS) of $0.01, exceeding the consensus estimate of -$0.03.
Today's Q4 results are expected to show a significant rise in EPS to $0.43. Analysts expect revenue to have grown 26.98% year-over-year to $837.05 million, a substantial improvement from the $0.14 loss in the same period last year and the $0.19 loss in the most recent quarter.
Strategic Partnerships Fuel Growth
Affirm's success is closely tied to its strategic partnerships. The integration of its “Adaptive Checkout” into Amazon Pay back in June 2023 was a game-changer, providing Affirm with access to Amazon's vast customer base and significantly boosting its stock price.
Similarly, the expansion of its partnership with Walmart, allowing customers to use pay-over-time options at self-checkout kiosks across thousands of stores, has further solidified Affirm's position in the market.
Bull Case:
- Strong Revenue Growth: Continued expansion of partnerships with major retailers like Amazon and Walmart will drive revenue growth.
- Profitability on the Horizon: The expected EPS of $0.43 signals a significant step towards profitability, alleviating concerns about the company's long-term financial sustainability.
- Growing BNPL Market: Consumer preference for pay-over-time options continues to increase, creating a favorable environment for Affirm's services.
- Positive Analyst Upgrades: Recent upgrades from firms like Compass Point indicate confidence in Affirm's future performance and growth potential.
Bear Case:
- Interest Rate Sensitivity: Rising interest rates could negatively impact consumer spending and increase Affirm's funding costs, squeezing margins.
- Increased Competition: The BNPL sector is becoming increasingly crowded, with established players and new entrants vying for market share.
- Regulatory Scrutiny: Potential regulatory oversight of the BNPL industry could impose restrictions on Affirm's operations and business model.
- Insider Selling: Recent insider sales, such as the CFO's sale of shares, could raise concerns about executive confidence in the company's future prospects.
Affirm's stock heads into the report at a significant resistance level. The upcoming earnings report will be a key catalyst in determining whether the stock can break through the $80 level and continue its upward trajectory, or whether a correction may be on the cards.
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