Affirm Stock Soars on New Deal With Amazon Pay
Shares of Affirm Holdings (AFRM) experienced a significant surge on Wednesday following the announcement of a partnership with Amazon Pay (AMZN).
This collaboration will enable merchants utilizing Amazon Pay to integrate Affirm’s “Adaptive Checkout” feature, providing customers with the option to pay for their purchases over time. The technology is already accessible on Amazon.com and the Amazon mobile app.
The news of the partnership propelled Affirm shares to soar by as much as 20% during Wednesday’s trading session. The buy-now-pay-later industry has become highly competitive, with companies like Block (SQ) and Klarna vying with Affirm, PayPal (PYPL), and Apple (AAPL).
Affirm has been undergoing adjustments to adapt to this intensifying landscape, having reduced its workforce by 19% in February. Additionally, its recent earnings report resulted in a decline in share value as losses continued to accumulate.
Truist analyst Andrew Jeffrey expressed optimism regarding the integration of Adaptive Checkout into Amazon’s digital wallet, stating that it will enhance visibility, merchant adoption, and consumer adoption.
He acknowledged Apple’s significant advantage due to its integration with the native iPhone but noted that Amazon’s dominance in e-commerce and its expanding digital wallet efforts are crucial for Affirm’s growth in the e-commerce sector.
Apple’s entry into the buy-now-pay-later market has impacted the share prices of Affirm and PayPal, as highlighted by Jeffrey. Affirm’s stock has experienced a decline of approximately 35% over the past year and an 80% drop since its initial public offering in January 2021.
During the JPMorgan Global Technology Media & Communications Conference on May 23, Affirm CEO Max Levchin expressed his belief that Apple’s involvement in the industry indicates the longevity of the buy-now-pay-later concept.
Levchin emphasized that Apple’s commitment to this venture suggests it will not be a fleeting trend but rather a lasting development.
Affirm anticipates that the increasing adoption of digital wallets will benefit its business in the long term.
According to the company, merchants using Affirm have observed a 60% higher average order value compared to other payment methods, and 88% of Affirm purchases come from repeat customers.
Affirm’s president, Libor Michalek, projected that digital wallets will account for over half of worldwide e-commerce transactions by 2025.
The partnership with Amazon is an extension of the existing collaboration established in 2021. Affirm also partners with various other companies, including Shopify (SHOP), Walmart (WMT), and Target (TGT).
Adaptive Checkout, the product being integrated into Amazon Pay, allows customers to customize their payment plans based on their individual needs. This flexibility enables them to request additional time to settle their bills or make larger initial payments.
