In light of AAPL, GS competition, Affirm Holdings (AFRM) investors opt to sell now, buy later

Affirm Holdings (NASDAQ: AFRM) got sideswiped by a report in Bloomberg on Tuesday that Apple (NASDAQ: AAPL) has renewed its affair with Goldman Sachs (NYSE: GS) in order to launch a “buy now, pay later” platform that would likely compete head-on with Affirm’s thus far successful business model. Shares dumped more than 14% in Tuesday’s session and closed down 10.5% at $58.21. AFRM stock did open 2.5% higher on Wednesday at the time of writing.

AFRM stock forecast: this might change everything

Up until now, Affirm Holdings has received lots of glowing reviews around earnings season as the fast-growing payment installments player grew revenue at a steady clip. Revenue grew by 48% between 2019 and 2020, and analyst consensus sees it jumping another 63% this year. Much of the increase in growth is attributable to Affirm’s “buy now, pay later” payment option getting more widely accepted by Shopify (Nasdaq: SHOP) merchants. Goldman’s relationship with Apple goes back several years to when the two joined forces to offer the Apple Card, for which the bank acted as the lender.

Of the five sell-side research notes in June on Affirm, four placed AFRM in the “buy” camp. Analysts give the firm a consensus price target of $76.71 – a 24% upside from Tuesday’s close. AFRM has been getting the cold shoulder for some time however. The stock is down 60% from its February 10 high of $146.90, having never recovered from the growth stock sell-off in May.

AFRM technical forecast: pain now, not later

As much as I would like to tell readers to disregard the doom news, the chart is not looking much better. Though AFRM shares did climb somewhat steadily since March, Tuesday’s crash seems like it was already in the cards. Since mid-June AFRM stock could not climb above $70. To re-start a new upward trend, Affirm needed to not only surmount $70 but also submit a new range high above $79.30. On Tuesday, AFRM broke through the 9-day ($65.70), the 20-day ($65.88) and the 50-day ($61.08) Simple Moving Averages (SMAs) in one fell swoop.

Despite Wednesday’s higher market open, the downward trend seems likely to continue. Having already closed below early June support at $59.46, it seems bullish entrants should await support at $48.37. With the RSI painting 39, there is clearly room for further downward pressure this week and next. Until the next earnings call, the AAPL/GS alliance is likely place a rather dark storm cloud above AFRM stock.

AFRM daily chart