Affirm (AFRM) begins trading today, the price is currently at $49. Many are expecting the open price upwards of $90. This gives the firm an $11.9 billion valuation, based on common stock outstanding, and around a $15 billion valuation on a fully-diluted basis.
Affirm is the first of several companies set to go public this week. The secondhand luxury goods company Poshmark, pet supply retailer Petco Animal Supplies, mobile game developer Playtika, and auto service supply company Driven Brands are all set to go public within the next few days.
The streak of public debuts continues the IPO boom from 2020, which saw one of the hottest years on record, led by listings from Airbnb, Snowflake, Palantir, and DoorDash. US IPOs raised a record $156 billion in 2020, according to Bloomberg data.
Revenue at Affirm has been accelerating, up 98% year-over-year in the company’s most recent September 2020 filing. Affirm is reliant on one merchant, Peloton, for some 30% of its revenue. The company’s net loss narrowed to $15.3 million from $30.8 million in its most recent quarter.
Affirm’s IPO was led by Morgan Stanley, Goldman Sachs, and Allen & Co. Its shares are expected to begin trading Wednesday on the Nasdaq under the ticker AFRM.
Fintech gains investor sentiment
Affirm is looking to take advantage of investor sentiment around growth companies. In recent years, investors have cared more about growth than profits, so many companies that lose money have high stock prices.
Importantly, fintech has been very hot leading up to 2020, and this trend should continue. We have seen similar interest in Klarna and Afterpay (OTC:AFTPY), meaning that Affirm could find success following today’s public markets debut. However, one thing for investors to watch is the pandemic impact. What happens when the world will return to normal? Will investors and consumers lose interest in payment installments?
For now, keep an eye on AFRM stock, both as a bellwether for fintech IPOs in 2021 and for its own potential as a retail transaction disruptor.
