Affirm IPO: Date, Price and More for AFRM Stock
The Affirm IPO is filed with the SEC. Founded by a PayPal alumni, the e-commerce platform is finally going public. And investors are looking forward for the launch of Affirm stock.
But is Affirm a good investment opportunity? Here’s what we know…
Affirm IPO: The Business
PayPal co-founder Max Levchin founded Affirm in 2012 with Nathan Gettings, Jeffrey Kaditz and Alex Rampell. Affirm is a technology company providing e-commerce solutions. It allows consumers to make purchases in interest-free installments. The company also offers an app to help people manage payments or open high-yield savings accounts.
In the Affirm IPO prospectus, the company states:
“We are building the next generation platform for digital and mobile-first commerce. We believe by using modern technology, the very best engineering talent, and a mission-driven approach we can reinvent the payment experience. Our solutions, which are built on trust and transparency, make it easier for consumers to spend responsibly and with confidence, easier for merchants to convert sales and grow, and easier for commerce to thrive.”
E-commerce is gaining popularity as technology continues to evolve. And quarantines from the coronavirus only furthered the attraction of online shopping and payment platforms. So, it’s not a surprise Affirm stock is coming now. But what are you really investing in?
Affirm Stock: Investing in the Product
Affirm claims current payment options and systems create risk that are harmful to both consumers and merchants. The company also claims they aren’t kept up-to-date for the latest technology trends such as mobile commerce. To combat this, Affirm’s products focus on three areas.
Point-of-sale payment solution for consumers. Consumers can pay in fixed amounts without deferred interest, hidden fees or penalties. This lets people pay over time instead of upfront. However, the company does offer interest bearing loans in addition to 0% APR options. These loans charge simple interest, a fixed amount agreed upon upfront that never compounds.
Merchant commerce solutions. Affirm claims its solutions help merchants to promote and sell their products, optimize customer acquisition and drive sales. By giving consumers a flexible payment option, Affirms says merchants can avoid discounts and other marketing promotions hurtful to revenue. The solutions also give product-level data and insight to improve marketing strategies.
Consumer-focused app. The app contains a suite of Affirm’s products. Users can manage payments, open a high-yield savings account and access a personalized marketplace. The marketplace lets consumers find products and buy them from Affirm’s merchant partners. The app also lets merchants give personalized offers based on the consumers’ spending and shopping habits.
Affirm notes its business benefits from Gen Z and Millennials, people born between 1981 and 2012. These generations create the largest U.S. population and are the driving force in technology and e-commerce trends. According to the Affirm IPO prospectus, the spending power of this population reached over $2.5 trillion in 2020.
The E-Commerce Industry is Growing
Before you decide to invest in Affirm stock, it’s important to understand the industry. Affirm is in the technology sector and, more specifically, e-commerce. Affirm refers to eMarketer for industry statistics. In 2019, global online sales grew 20% to $3.4 trillion. It’s expected to grow to $5.8 trillion by 2023.
But Affirms says e-commerce accounts for just 14% of total retail sales. Gen Z and Millennials are the ones pushing that number higher. According to Statista, 70% of Millennials prefer online shopping. And in the first half of 2020, the percentage of e-commerce sales increased from 11.8% to 16.1% in the U.S.
There’s also an increase in the idea of “buy now, pay later.” According to Worldpay’s 2020 Global Payments report, this is the fastest growing global payment method. In North America, it’s expected to be 3% of e-commerce payments by 2023. In EMEA, it’s already 6% and could grow to 10% by 2023.
As e-commerce becomes more popular with younger generations, Affirm will have the opportunity to expand and grow to meet the need. But is Affirm profitable?
The Financial Data
Profitability is a big topic for IPOs. While investors were skeptical of companies like Uber for not being profitable, 2020 saw a different trend. Investors are focusing more on growth and the possibility of profit in the future. And that could be good for the Affirm IPO.
On one hand, the company is seeing tremendous revenue growth. For 2019, recorded net revenue was $264.4 million. It almost doubled for the year ended June 30, 2020. Revenue grew 92.7% to $509.5 million. And the trend continued for the three months ended September 30. In 2019, revenue was $87.9 million for this time period. In 2020, it increased to $174 million for a growth rate of 98%.
On the other hand, Affirm has yet to report a net profit. In 2019, the company had a net loss of $120.5 million. However, Affirm was able to decrease its net loss to $112.6 million in 2020. And the same goes for the three months ended September 30. Net loss decreased from $30.8 million in 2019 to $15.3 million in 2020. If Affirm can keep this trend and continues to expand with the e-commerce industry, it’s possible for Affirm to become profitable in the future.
So, for those interested in investing in Affirm stock, what is the Affirm IPO date?
Affirm IPO Details: Date, Price and Ticker Symbol
Affirm filed to go public on November 18, 2020. Currently, there is no set Affirm IPO date, price range or number of offer shares. But analysts think the offering will come sometime in December alongside unicorn Airbnb. Affirm applied to list on the Nasdaq under the ticker symbol AFRM.
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Affirm stock will give investors a chance to invest in a rapidly growing industry. If the market continues to improve and reacts well to IPOs, the Affirm IPO has the ability to be successful.