Affirm Holdings Earnings: AFRM stock sinks after dismal earnings loss, guidance

• Affirm Holdings guidance includes big loss next quarter.
• AFRM shares are down 11% in Friday's premarket
• Affirm missed adjusted EPS for the recent quarter by more than 50%.

Affirm (AFRM) stock collapsed 21.4% to $58.68 a share on Thursday after the Buy Now Pay Later firm accidentally released quarterly data for fiscal Q2 2022 on Twitter. Before deleting the tweet, which showed positive user growth, AFRM shares moved up as much as 10%. Then Affirm released the full report around 2:45 PM EST, which promptly led the installment payments company's stock price to drop off a cliff due to unimpressive guidance figures.

Affirm Stock News: user growth up, but losses too

The confusing news flow led the stock to drop another 7.3% to $54.40 in the afterhours trade, and many shareholders were left with their head in their hands. The shares are down 11.2% in Friday's premarket to $52.11.

 

Affirm lost $-0.57 a share in fiscal Q2 compared with consensus of $-0.37 a share. Revenue, however, was on point, with revenue coming in at $361 million compared with a forecast for $333 million.

The most important focal point from the guidance was the operating loss as a percentage of revenue. This is projected to be -20% at the midpoint in fiscal Q3, though it was just -2% in the most recent quarter. This means investors can expect even bigger upcoming losses. The midpoint revenue projection for the next quarter also was about 1% below consensus at $330 million.

For his part, CEO Max Levchin of PayPal Mafia fame was upbeat due to the strong user growth numbers. "The number of active merchants on our platform is another key measure for Affirm, and over the last year we've significantly expanded our reach. There, too, we accelerated with a more than 20x increase from a year ago and a 64% increase from the rolling 12-month tally we reported just 90 days ago."

Activer users grew 150% YoY to 11.2 million, which was 29% growth just over the previous quarter.

AFRM key statistics

Market Cap	$12.2 billion
Price/Earnings	N/A
Price/Sales	13
Price/Book	7
Enterprise Value	$12.3 billion
Operating Margin	-52%
Profit Margin	-76%
52-week high	$176.65
52-week low	$46.50
Short Interest	7%
Average Wall Street Rating and Price Target	Buy, $111

 

Affirm Stock Forecast: aiming for new all-time low

With the premarket on Friday down more than 11% from Thursday's close, there is more pain to be had in this ticker. It seem like the only support is the all-time low at $46.50 from May 2021. Just above there around $48-$49, there sits some more support from this past January.

If the premarket is correct though, it seems as if AFRM might not only test the all-time low but also produce an new all-time low. The market is no longer treating user growth as more important than profits in this hawkish interest rate environment.

While AFRM stock has shed 38% from its highs in just 24 hours, the Relative Strength Index (RSI) reading at 36 makes it appear that it could fall much further in the coming days and weeks.

AFRM 4-hour chart

The author owns shares of AFRM.

---