Home screen of Affirm Holdings Inc. website on a laptop in an organized photograph taken in Little Falls, New Jersey, USA, on Wednesday, December 9, 2020.
Gabby Jones | Bloomberg | Getty Images
Shares in payment company Affirm soared more than 80% in its initial public offering on Nasdaq, ushering in what is likely to be a busy season of market debuts.
The shares started trading at $ 90.90 per share. Affirm had quoted its shares at $ 49 each, above its target range of $ 41 to $ 44 each, and is looking to raise $ 1.2 billion.
Founded in 2013 by PayPal co-founder Max Levchin, Affirm has become a highlight in the “buy now, pay later” space, which offers loans at the point of sale. The company allows customers to finance online purchases that can be paid in monthly installments without accruing compound interest.
He works with around 6,500 retailers, including Peloton, Wayfair, Walmart and direct-consumer eyewear company Warby Parker. In an update to its IPO process, Affirm said it is used by more than 6.2 million people. Affirm also partnered with Shopify last year, allowing merchants to offer installment loans on the products they sell.
Affirm generated revenue of about $ 510 million in the fiscal year ended June 30, a 93% jump from last year, according to its documents. In the three months ended September 30, revenue grew 98% year-over-year, while net losses fell about half, to $ 15.3 million.
Affirm makes money when it helps a merchant make a sale. It also earns interest income on loans it buys from bank partners and some consumer loans. The rate they charge varies depending on the credit quality of consumers, but it usually starts at 0%.
“Our goal is to be a viable alternative to credit cards,” Levchin told CNBC before the company’s first deal.
Morgan Stanley, Goldman Sachs and Allen & Co were the main subscribers to the offer. Major investors include Peter Thiel’s Founders Fund, Khosla Ventures and Lightspeed Venture Funds.
Affirm’s debut in the market could mark another successful venture for Levchin, who has 27.5 million shares in the online lender. After selling PayPal to eBay in 2002, Levchin started the social application company Slide. This was sold to Google in 2010 for $ 182 million.
Affirm, which is marketed under the symbol “AFRM”, has been included on CNBC’s Disruptor 50 list twice.
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