The tech world’s giant, Apple, garners attention with CEO Tim Cook’s emphasis on being the best, not the first. Recently, Apple’s partnership with Buy Now, Pay Later company Affirm (NASDAQ: AFRM) turned heads. However, investors seemed unimpressed, causing Affirm’s stock to dip post-announcement!
Impact of Apple’s Partnership with Affirm
Market volatility often dogs new companies, like Affirm, whose shares dropped 80% despite significant business progress. Why? Perhaps because Buy Now, Pay Later loans, Affirm’s core business, are viewed as a commodity. Apple’s launch and subsequent outsourcing to Affirm indicate dissatisfaction with its in-house product, also highlighting Affirm’s diversified loan offerings.
In essence, Apple’s choice to partner with Affirm underscores the latter’s quality and service excellence over competitors. It also rebuts the notion that Buy-Now, Pay-Later lending is a simple copy-and-paste business, illustrating Affirm’s competitive edge.
Apple’s Contribution to Affirm’s Long-Term Growth
The partnership leverages Apple’s vast user base, seamlessly integrating Affirm into Apple Pay, expanding its reach to potential customers. With approximately 60 million US Apple Pay users (expected to grow), Affirm’s exposure multiplies, promising strong growth once operational.
Affirm, with its 17.8 million active users, stands to gain substantially from Apple’s customer funnel, paving the way for accelerated growth in the coming years.
Affirm’s Value Proposition Beyond Apple
Prior to the partnership, Affirm had established a strong foothold in the retail sector, boasting partnerships with major players like Amazon, Shopify, Walmart, and Target. Although its stock valuation had spiked post-IPO, Affirm’s growth was impeded by rising interest rates. However, recent quarters have seen a 51% YoY revenue surge, while the enterprise value to sales ratio remains attractive.
With an anticipated growth spurt yet to bear fruit from the Apple collaboration, investors eye a promising period ahead for Affirm, positioning it favorably among fintech stocks for the foreseeable future.
Considerations for Potential Investors
Prioritize meticulous research before investing in Affirm. While the Motley Fool Stock Advisor team excluded Affirm from their top 10 stock picks, highlighting other potential blockbuster returns, Affirm’s partnership with Apple could be a game-changer. Remember, timely investments in transformative companies like Nvidia in 2005 reaped enormous rewards over time.
Investment decisions should align with your long-term financial goals, but do keep an eye on the trajectory of Affirm in the evolving fintech landscape, a sector brimming with hidden gems under the surface.
