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Affirm: The Antithesis Of Deferred Gratification

Mar. 04, 2021 9:36 AM ETAffirm Holdings, Inc. (AFRM) Stock16 Comments
Pacifica Yield profile picture
Pacifica Yield


  • Affirm is the leading American buy-now, pay-later firm.
  • The company is set to benefit from a macro shift to online retail.
  • Strong revenue growth rates are set to continue.

Delayed gratification describes an ability to postpone an immediate gain in favour of a potentially more valuable, longer-term reward. Online shopping during the age of the pandemic perhaps offers a case study of this with the rapid growth of e-commerce set against broader economic destruction and job losses. E-commerce sales in the USA grew by 44% in 2020 to $861 billion and now account for 21.3% of total retail sales.

Affirm (NASDAQ:AFRM) is a San Francisco-based buy-now, pay-later firm that recently went public and currently trades at a market capitalization of $22.20 billion. BNPL at its core is a financing instrument used to boost online spending by deferring the immediate cost of an item, then spreading it as periodic instalments over a specified time period. This is an inversion of delayed gratification as future spending and saving power are sacrificed for consumption today. This type of consumption is set to grow as e-commerce becomes ever more ubiquitous in the post-pandemic age. Affirm is set to benefit from this.

The stock price peaked at $140 and has since fallen 40% to $84.41 as of writing this article. This has been driven by a wider rotation of capital away from high growth and somewhat expensive companies to value plays that have been adversely impacted by the pandemic.

Affirm, in spite of the short-term gyration in the price of its common shares, has a business model set to ride the tailwinds of the growth of e-commerce. The company has created a financing mechanism for online vendors to boost sales from higher conversion rates.

Driving Increased Sales From Higher Conversion Rates

Affirm partners with online merchants to offer another way for their customers at checkout to pay. They make money from interest levied on these customers as well as fees charged to

This article was written by

Pacifica Yield profile picture
The equity market is an incredibly powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, and green energy firms. By Leo Imasuen

Analyst’s Disclosure: I am/we are long AFRM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (16)

The big boys are not gonna let this thing grow at 30% per year. With no competitive advantage, this company is doomed.
Pacifica Yield profile picture
@markb It already has surpassed this growth rate.
Free Cash Flow 50 profile picture
@markb Thanks for your brilliant insight.
There must be a fairly low barrier of entry in the BNPL space. Seems like I see a new company like this every week.
$40 sounds about right. it was $36 in the private round just 5 months ago.
Critilyst profile picture
I bought at 75$ yesterday, after seeing it rebounding from 70$ bottom. I guess I'll find out on Monday if that 70$ was truly the bottom? 😂 Anyone here bought lower than 75$?
@Critilyst it is not a short term play , to get 2-3x return you nned to hold the line for 2-3 years
I thought I brought the dip at 100! Oh well, will have to buy some more if it goes any further
@Seanj101 buy more at $50 .
I bought right at 140
Pacifica Yield profile picture
@Losingeverything This should be a long term (5 year+ hold). I think it should recover and move higher if revenue outperforms expectations.
I understand momentum trading but I don’t understand the valuation at even today’s price. They are on my watch list at $40 or less.
@HermanMunster not getting to 40 or less, bro, stop it.
Pacifica Yield profile picture
@HermanMunster I think the floor should be around $65 - $80. At this point I'll add more shares.
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