Is it Worth Purchasing Affirm When Its Price Drops Below $85?
In the world of finance, it's no secret that the Buy Now, Pay Later (BNPL) industry is on a roll. Fueled by innovative companies like Affirm, this sector has caught the attention of both consumers and investors. And when Affirm recently smashed Wall Street's expectations during its latest financial earnings report, the stock soared nearly 20%!
If you think Affirm's party isn't over yet, you're not alone. The stock has skyrocketed an astonishing 677% since the beginning of 2023! Now, you're probably left wondering: is it still smart to hop on the Affirm bandwagon before it hits $85 a share, or should you hang tight for a better deal?
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Affirm's Network Effect: Elevating the BNPL Game
buy now, pay later (BNPL) aims to treat each transaction as an individual loan. Technically, consumers are still borrowing money, but it helps prevent people from accumulating large balances with high interest rates, a financial black hole that consumers can get stuck in. Yes, some BNPL loans make consumers pay interest charges, but many offer zero-percent interest. In these cases, Affirm makes money from the fees it charges merchants.
For those unfamiliar, BNPL services aim to reinvent consumer spending by treating each transaction as a standalone loan. It might sound like a complicated dance, but the benefits are simple. Buy Now, Pay Later enables customers to split their purchases into multiple payments without accruing exorbitant interest charges – a debt trap many consumers unfortunately end up in.
network effect in its business, where the more merchants and spenders use it, the more powerful it becomes.
Affirm's philosophy revolves around building a powerful network effect within its business model. Essentially, the more consumers and merchants that use its services, the stronger its position in the market becomes. And based on its recent earnings report, the numbers don't lie.
Affirm's Q2 2025 earnings announced a jaw-dropping 35% increase in GMV and a 47% surge in revenue year-over-year. This growth rate places Affirm among the speediest-growing financial technology companies worldwide. Merchant partnerships with retail giants like Amazon and Apple have only further fueled its success.
Can Affirm's BNPL Business Endure the Test of Time? A Definitive Yes!
free cash flow over the past year. Affirm will always depend on people repaying their loans, but the business is financially healthy with no current red flags.
Historically, market skepticism has plagued BNPL companies, casting doubt on their ability to survive and grow profitably. However, Affirm has not only proven its resilience but demonstrated a knack for financial innovation.
As you may be aware, Affirm primarily offers interest-free financing, with zero-interest loans accounting for a modest 28% of its total products in Q2 2025. Meanwhile, its physical Affirm Card, a convenient payment solution for everyday transactions, has amassed 1.7 million users. To add to its revenue streams, Affirm is continually exploring new opportunities and investments, like partnerships with prominent financial institutions such as Prudential and Liberty Mutual.
AFRM EV to Revenues data by
Should You Invest in Affirm Before $85?
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So, the million-dollar question remains: is now the right time to invest in Affirm before it breezes past the $85 mark, or should investors wait for a better entry point?
enterprise value to revenue, Affirm has continually been more expensive. On the other hand, American Express grew revenue by roughly 10% year over year last quarter. Affirm grew at 46%, a solid argument for a higher
Affirm's CEO, Max Levchin, dreams of building a company akin to American Express, with strong brand power and expansive financial offerings. By assessing the two companies based on their enterprise value to revenue, it's clear that Affirm has continually boasted a higher price tag. While some may view this as a potential red flag, they should remember that Affirm's extraordinary growth rate supports a more significant valuation.
valuation.
Provided that Affirm's growth trajectory continues its upward trend and its Apple Pay integration delivers on its well-deserved hype, investors appear well-served to pay a premium for this shining star of the BNPL world.
Of course, it's essential to exercise caution and avoid making hasty decisions. Affirm has notoriously seen significant fluctuations in its stock price, so investors should tread lightly and take a conservative approach by gradually building their position in the stock. After all, sometimes patience pays off!
As we've seen, the BNPL market presents an exciting opportunity for investors eager to hitch a ride on the growth wave. Affirm, with its robust market position and strategic partnerships, remains a compelling long-term investment choice for those enamored by the potential of this revolutionary sector.
- When considering whether to invest in Affirm before it reaches $85 a share, it's important to consider its valuation, especially when comparing it to financial giants like American Express.
- Affirm's business model relies on its network effect, where the more merchants and spenders use its services, the stronger its position in the market becomes, as evident in its recent Q2 2025 earnings report.
- To further explore revenue streams, Affirm is continually investing in partnerships with prominent financial institutions, like Prudential and Liberty Mutual.
- While Affirm's stock may see significant fluctuations, its extraordinary growth rate supports a higher valuation and could potentially be a wise long-term investment choice for those interested in the BNPL market's potential.