SAN FRANCISCO - Affirm Holdings Inc. (NASDAQ: NASDAQ:AFRM), known for its buy now, pay later services, announced a significant update to its app aimed at improving customer experience, particularly as the holiday shopping season approaches. The revamped app now prominently displays users' purchasing power, streamlines the search for 0% APR offers, and simplifies access to personalized payment plans.
The update reflects Affirm's response to consumer demands for flexible payment solutions that allow for budget management without incurring late fees or hidden costs. Vishal Kapoor, Affirm's Senior Vice President of Product, stated that the app's enhancements are driven by user feedback and the desire to meet the holiday shoppers' preference for interest-free payment options.
Affirm's research highlights the importance of 0% APR financing, with half of the consumers valuing such options as much as traditional discounts. Moreover, over 50% of users are leveraging payment plans to make purchases more affordable and to assist with budgeting.
The app's new features enable customers to check real-time estimates of their spending capacity with Affirm, easily find credit offers including interest-free options, manage active payment plans, and explore additional financial tools like the Affirm Money Account and Affirm Card.
As part of its commitment to responsible lending, Affirm ensures that consumers are underwritten for each transaction, with the promise of no late fees or compound interest charges. The updated Affirm app is available for download on the Apple (NASDAQ:AAPL) App Store and Google (NASDAQ:GOOGL) Play Store.
This recent development by Affirm is part of a broader trend in the financial technology sector where companies are increasingly focusing on user-friendly tools that promote transparency and fiscal responsibility. The information about the app update and its features is based on a press release statement from Affirm.
In other recent news, Affirm Holdings Inc. has been in the spotlight with Deutsche Bank reiterating its Hold rating and projecting a 35% year-over-year revenue increase to approximately $670 million in its upcoming Q1 2025 earnings report. The bank also anticipates Affirm's fiscal year 2025 gross merchandise volume growth to exceed 28%, and adjusted operating margin to surpass 19%. Affirm's strategic move to introduce the Affirm Card and its collaborations with large marketplaces have been key in this growth trajectory.
The company is also expected to benefit from the projected record-breaking $18.5 billion spending through buy now, pay later (BNPL) services in Q4 2024, according to Adobe (NASDAQ:ADBE) Analytics. This marks an 11.4% year-on-year growth. With a recent downtrend in interest rates, Affirm has the opportunity to approve more users while preserving profit margins. However, it is expected to maintain its strict underwriting standards due to ongoing economic uncertainties.
In other recent developments, Morgan Stanley upgraded Affirm's rating from Underweight to Equalweight and raised its price target to $37 from $20. This is due to strategic moves that position the company to attract a higher-income customer base. Meanwhile, Mizuho Securities maintained its Outperform rating on Affirm's stock, projecting a potential 30-35% increase in gross merchandise volume for fiscal year 2027 due to lower interest rates. Affirm's recent strategic partnership with Apple Pay, which enables flexible payment options for U.S. customers, was also noted.
InvestingPro Insights
Affirm's strategic app update aligns well with its recent financial performance and market position. According to InvestingPro data, Affirm has shown impressive revenue growth of 46.29% over the last twelve months, reaching $2.32 billion. This growth trajectory supports the company's investment in enhancing user experience and expanding its service offerings.
InvestingPro Tips highlight that Affirm's stock has demonstrated a "strong return over the last three months" and a "large price uptick over the last six months," with a remarkable 150.7% price return over the past year. These trends suggest that investors are responding positively to Affirm's business strategies and market positioning.
However, it's important to note that Affirm is "not profitable over the last twelve months," with an adjusted operating income of -$607.33 million. This aligns with another InvestingPro Tip indicating that "analysts do not anticipate the company will be profitable this year." The focus on 0% APR offers and improved user experience could be seen as efforts to drive user acquisition and transaction volume, potentially paving the way for future profitability.
The company's emphasis on responsible lending and transparency, as mentioned in the article, is crucial given that Affirm's stock "generally trades with high price volatility." This approach may help in building long-term customer trust and loyalty.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Affirm, providing a deeper understanding of the company's financial health and market position.
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