Affirm Stock Soared on Target Partnership. It’s Not the Good News the Market Thinks It Is.
Target announced new ‘buy now, pay later’ options for consumers ahead of the holiday season.
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Affirm Holdings (ticker: AFRM) stock fell early on Thursday, a day after it surged as Target (TGT) said it was joining with the “buy now, pay later” (BNPL) provider ahead of the holiday season.
The company’s stock rose 20% on Wednesday, as the big-box retailer announced new payment options for consumers through partnerships with Affirm and its smaller peer Sezzle (SZL.Australia). Affirm shares were 1.2% lower in early trading Thursday.
Target said consumers would be able to pay for purchases over $100 in monthly payments through Affirm’s technology, while the Sezzle option splits each purchase into four interest-free payments over six weeks.
Target’s blog post may have sent the stock soaring but some, including Morgan Stanley , have noted that the tie-up isn’t new—Affirm and Target have been working together since 2019. Christopher Brendler, technology analyst at D.A. Davidson, said he was “surprised” at the share price reaction as Affirm has been a Target partner for “several years now.”
“While there’s a good chance Target is expanding availability with [this] launch and we did notice Affirm’s new adaptive checkout, we still see the reaction as overdone,” he said.
An Affirm representative told Barron’s: “We are pleased to partner with Target to empower more consumers with a flexible and transparent way to pay over time. More than half of Americans are interested in using a pay-over-time solution this holiday season, according to our recent survey, and the majority (69%) cited the need to help them better budget.”
The BNPL concept is experiencing a boom, particularly among younger people, and some of the industry’s biggest names have been expanding into the space over the past year or so. PayPal (PYPL) launched its ‘Pay in 4’ service last year, which allows consumers to make purchases in four interest-free payments. Square agreed to buy Australia’s Afterpay in August in an all-stock deal worth $29 billion, in a huge bet on BNPL by Jack Dorsey’s financial-payments company.
Most recently, Mastercard (MA) entered the field last month, unveiling plans to roll out a new ‘Mastercard Installments’ service in the U.S., Australia and the U.K. The news sent Affirm’s stock tumbling more than 10%. However, the stock remains 87% up over the past six months following a partnership with Amazon.com (AMZN), strong earnings and guidance earlier this month, and the Target news.
Write to Callum Keown at [email protected]
