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The Affirm Holdings Stock Price Rallied 30% Ahead of Q1 Earnings

Simon Mugo trader
Updated 12 May 2022

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Key points:

  • Affirm Holdings stock rallied 30% ahead of its Q1 earnings later tonight.
  • The rally was driven by positive investor sentiment, reversing recent losses.
  • Investors are looking forward to Affrim’s Q1 results later tonight.

The Affirm Holdings Inc (NASDAQ: AFRM) stock price rallied 30%, recouping most of yesterday’s losses as investors shook off the negative market outlook issued by Upstart Holdings regarding their performance.

Also read: The Best Financial Stock To Buy Right Now.

Luckily for Affirm Holdings, today’s rally was witnessed across the entire subsector of lenders that rely on technology to issue loans. Other fintech lending companies, including Upstart Holdings and Lendingclub, were trading higher today.

Affirm is set to release its Q1 results later tonight after the market closes. Most analysts have priced in a negative outlook in a market environment dominated by the spectre of rising interest rates and falling stock prices.

However, Affirm may be in a better position than its peers since its buy now, pay later business models incentivises its customers to keep paying their loans or risk losing the assets they bought or improved with Affirm’s loans.

Most debtors will do everything to maintain their current lifestyles; hence, the chances of Affirm’s clients repaying their loans are pretty high compared to other fintech firms such as Upstart Holdings, which are giving out unsecured loans.

However, some analysts have cut their Affirm Holdings stock price ratings, with Vincent Caintic, an analyst at Stephens, lowering his Affirm rating from equal weight to underweight while slashing his price target from $51 to $17.

Caintic noted that lenders heavily reliant on the capital markets for their funding needs would face significant challenges given the current bearish market environment. He also pointed out that demand for Affirm’s buy now, pay later loans would shrink given the high inflation levels that have squeezed most consumers' disposable income.

Still, Affirm’s fundamental situation could change if the Fed halts its aggressive rate hiking momentum as US inflation slows down, given the hawkish measures already implemented by the Federal Reserve.

Affirm shares may continue their current uptrend tomorrow if the company’s Q1 results beat analysts' expectations, and its future outlook is not as gloomy as expected.

*This is not investment advice. Always do your due diligence before making investment decisions.

Affirm Holdings stock price.

Affirm Holdings stock price 12-05-2022
Source: Tradingview

The Affirm Holdings stock price rallied 30.56% to trade at $19.35, rising from Wednesday’s closing price of $14.82.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading