Investors following Affirm Holdings (AFRM) would know that 2024 hasn’t been kind to this Fintech firm. AFRM is down 35.21% in 2024, but the 1-year price action shows an 80% surge, led by a decent Q4 2023 performance report released in August 2023. But then, the Q1 2024 numbers weren’t as good, leading to a sharp correction.
Yet, Tradequotex.com analyst Rahul Nambiampurath believes that Affirm’s growing product portfolio positions itself for future growth.
“Continued expansion and adoption of BNPL services remain at the core of Affirm’s business strategy,” mentions Rahul. He adds that the company is developing several Savings and Debit products, which can provide stable and recurring revenue streams.
Why Affirm Corrected and Why It Can Start Moving Up, Anytime Now?
One primary reason for AFRM’s correction was the lossy EPS declaration of $0.43. However, despite the lacklustre Q3 report released in May 2024, the price dip wasn’t massive. Here are the reasons for the same:
Even though the EPS was down, it was still better than the market expectation of -$0.70.
The company’s quarterly revenue increased by 51.2% year-over-year.
Affirm’s gross merchandise volume (GMV) increased, reflecting increased transaction volumes through its platform.
Also, here are the Q4 guidelines released with the May 2024 report:
Analysts forecast an EPS of $0.07 per share, indicating a potential improvement from previous quarters. Revenue is projected to be around $576 million.
Despite recent struggles, these results and guidelines indicate a significant improvement. Rahul adds that the positive outlook underscores Affirm’s potential for recovery and sustained growth in the coming quarters.
What Are the Technicals Hinting At?
At first glance, AFRM seems to be making a series of lower highs regarding the price action. However, the pattern breaks when AFRM breaks out of the upper trendline for a brief period, touching $39.30. Yet, the surge wasn’t sustainable. Investors can expect the next surge when the relative strength index indicator starts making higher highs, even against the price action.
AFRM price action using the daily chart: TradingView
For now, AFRM is back to trading inside the pennant, and a price rise above the upper trendline can find some resistance at $39.30. If the stock manages to break past this level, we can even expect it to touch $47 in time. However, reaching $39 would be a 30% surge from the current level.
Goldman Sachs recently set a “Buy” rating for AFRM with a price target of $42, which aligns with Rahul’s analysis. Even Truist Financial boosted its target from $28 to $33, reflecting a significant positive outlook on the stock’s future performance.
