Shares in Affirm Holdings crashed Wednesday in the wake of the consumer financing firm's fiscal first-quarter earnings. The company also lowered its full-year outlook for AFRM stock amid slowing sales at key customer Peloton Interactive.
Affirm reported a larger-than-expected loss in the September quarter while revenue met expectations amid a slowing economy. AFRM stock plummeted 22.6% to close at 12.10 on the stock market today.
In the Affirm earnings report, the company reported an 86-cent loss per share vs. analyst estimates for an 84-cent loss. Also, revenue rose 34% to $361.6 million, in line with estimates. In the year-earlier period, Affirm reported a loss of $1.13 per share.
The company said gross merchandise volume rose 62% to $4.39 billion vs. estimates at $4.37 billion.
Affirm lowered its fiscal 2023 outlook on gross merchandise volume to a range of $20.5 billion to $21.5 billion. That's down from $20.5 billion to $22 billion. Further, the company lowered its revenue prediction to $1.6 billion to $1.675 billion. That figure is down from $1.625 billion to $1.725 billion.
San Francisco-based AFRM stock reported earnings after the market close on Tuesday.
AFRM Stock: Profitability Targeted
At Mizuho Securities, analyst Dan Dolev said in a note to clients: "While results were solid, primarily marked by better-than-expected net revenue, lowering the fiscal year guide is the stain on the shirt."
Affirm receives most of its revenue from transaction fees paid by online retailers. In addition, Affirm obtains about one-third of its revenue from interest income paid by consumers.
"Importantly, AFRM reaffirmed its commitment to being consistently profitable on an adjusted basis by the end of fiscal 2023," Bank of America analyst Jason Kupferberg said in a note. "To that end, AFRM is slowing hiring."
At Deutsche Bank, analyst Bryan Keane said in a report: "Worries over the macros impact on the financial model, especially the deteriorating consumer credit profile, will likely continue to weigh on investor sentiment."
AFRM has dived 84% thus far this year. Heading into the Affirm earnings report, the stock had a Relative Strength Rating of dismal 6 out of a best-possible 99, according to IBD Stock Checkup.
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