Affirm Holdings (AFRM) Faces Pressure Ahead of Earnings Report

Affirm Holdings Inc. (AFRM), a leading buy now, pay later (BNPL) provider, is facing increased scrutiny as it prepares to release its fiscal year 2026 first-quarter earnings after market close today. The stock, currently trading at $71.06 in today's pre-market, has fallen almost 25% from its recent highs, reflecting a mix of market jitters and company-specific concerns.

Analysts project that Affirm Holdings will report an EPS of $0.62, up from $0.36 a year ago. Revenue is forecast to reach approximately $883.36 million, representing an estimated 26.47% increase compared to the same period last year.

Recent insider selling has further fueled market apprehension. In September, CFO Robert O’Hare sold over $2.6 million worth of shares, executed at prices between $82.24 and $85.28. Prior to that, he disposed of shares to cover tax obligations, netting over $1 million.

Even more concerning was the news that Affirm co-founder Max Levchin planned to sell over $58 million in Class A stock, adding to three previous sales totaling over $54 million the month prior. Such significant insider activity often raises red flags, implying that those with the most intimate knowledge of the company's prospects may believe the stock is currently overvalued.

However, it's not all doom and gloom for Affirm. The company has been aggressively expanding its partnerships, a strategy that could pay dividends in the long run. Notably, Affirm has deepened its collaboration with Wayfair, integrating its BNPL services directly into the retailer's checkout process. This move is strategically timed to capitalize on Wayfair's Way Day sales event and the crucial holiday shopping season.

Affirm has also broadened its reach through partnerships with Worldpay, integrating its BNPL solutions into Worldpay's embedded payments offering for software platforms. This collaboration allows over 1,000 software companies to offer Affirm as a payment option, significantly expanding Affirm's market. Furthermore, Affirm has integrated with Google's Agent Payments Protocol (AP2), aiming to embed its BNPL options into AI-driven shopping experiences.

Deals with Fanatics, offering BNPL options to sports fans, and FuturHealth, providing payment plans for healthcare services, including GLP-1 medications, demonstrate Affirm's ambition to diversify its revenue streams and tap into new markets. These partnerships have generally been met with positive market sentiment, reflected in modest stock price increases following their announcements.

While the market seems fixated on insider selling and short-term headwinds, it's important to remember that founders and executives often diversify their holdings for personal financial planning reasons. Levchin, in particular, may simply be managing his wealth after years of building a successful company.

Moreover, Affirm's aggressive partnership strategy suggests a company confident in its long-term growth potential. The market often overreacts to short term news, and has not yet taken into account how many new users Affirm has engaged with their new partnerships and Healthcare expansion.

The BNPL sector as a whole faces macroeconomic headwinds, but Affirm has positioned itself as a leader with innovative solutions and a wide range of partnerships. While risk remains, dismissing Affirm based solely on insider sales and short-term market fluctuations may prove to be a mistake.

Ultimately, Affirm's success hinges on its ability to navigate a complex and evolving landscape. The company must continue to innovate, expand its partnerships, and manage its risk effectively.