Shares of Affirm Holdings broke out strongly after the company reported earnings on Friday. The "buy now, pay later" app provider has been catching on among users and businesses, and so Affirm stock is Monday's selection for IBD 50 Growth Stocks To Watch.
Affirm stock broke past a buy point of 73.34 amid a 22% spike after the earnings report. Though this is a later-stage base that could net lower gains, other chart signals are bolstering its strong action on Monday. The stock is holding its hefty gains in a buy zone. The relative strength line is also at a new high.
Spot Bases And Buy Points With Pattern Recognition
For its fiscal second quarter that ended in December, the company's sales grew 47% to $866.4 million, while earnings per share of 23 cents marked a reversal from a 54-cent loss in the prior year. Analysts polled by FactSet are bullish on 2026 results and expect a spike in earnings to 66 cents per share, catapulting by 1,134%.
Affirm has more than 18 million active users who made a transaction at least once over a 12-month period. Gross merchandise value has surged past $26 billion.
Affirm Stock: Money Through Five Channels
How exactly does the company generate revenue? Affirm provides credit for transactions ranging from $50 to $30,000 and makes money through five channels.
First, it earns using a "merchant discount rate" to collect sales from merchant transactions. The rate is the amount businesses pay Affirm when customers use the platform for payments.
Second is interest from loans it extends, while the third is fees from services to investors who have bought loans from Affirm. Fourth, Affirm recognizes a gain or loss when it sells its loans. And last, it makes money through its virtual card, which operates over established credit card networks.
When compared with stocks in the Investor's Business Daily database, Affirm stock has a Composite Rating of 93. It also holds a stellar Relative Strength Rating of 98. The stock's ratings can be found on IBD MarketSurge and IBD Stock Checkup.
See The Latest Updates To IBD Watchlists
Also, according to IBD MarketSurge, mutual funds own 60% of outstanding shares. More funds have been net buyers over the past two quarter. Affirm stock also holds a strong Accumulation/Distribution Rating of B. The rating indicates substantial interest from funds over the past 13 weeks. In IBD's mutual fund index, the Lord Abbett Developing Growth Fund (LAGWX) and the Fidelity Contrafund (FCNTX) hold shares.
Please follow VRamakrishnan on X/Twitter for more news on the stock market today.
