Affirm Holdings Inc.’s shares nearly doubled on Wednesday’s midday trading session after the financial technology company made its public debut.
Affirmar AFRM shares,
opened at $ 90.90 on Wednesday after listing on the Nasdaq, with the first trade arriving at 12:20 pm ET. The company priced its initial public offering at $ 49 per share on Tuesday, above an already high range of $ 41 to $ 44 per share. The stock changed hands recently, reaching $ 98.
The company raised at least $ 1.2 billion through the offer. Subscribers have access to a supplementary lot of 3.7 million shares, in addition to the 24.6 million original shares that Affirm sold through its IPO. Affirm postponed its IPO at the end of last year due to the large stock movements on the first day of Airbnb Inc. ABNB,
and DoorDash Inc. DASH,
Claim, led by PayPal Holdings Inc. PYPL,
co-founder Max Levchin offers payment options that allow people to make online purchases in installments. The company receives compensation from merchants when customers choose one of Affirm’s loan options. Affirm offers an interest-free “0% APR” offer, as well as a “simple interest” loan product, through which it is also paid at the end of a consumer transaction.
Levchin told MarketWatch that transparency in terms of how much consumers will pay for a particular purchase is becoming “a must-have resource and not a good thing to have” among generations who are currently “financially active” and those who are to come.
“Revolving credit is a tool that is not as useful as it is dangerous,” he said in an interview after negotiations began. Levchin predicted that most established participants would switch to simple interest products instead of compounds.
Affirm the IPO: 5 things to know about the fintech company that is shaking credit online
The company’s largest customer is Peloton Interactive Inc. PTON,
which accounted for about 28% of Affirm’s revenue in its last fiscal year ending in June. Affirm earned revenue of $ 509.5 million in its last fiscal year, compared to $ 264.4 million the previous year. The company recorded a net loss of $ 112.6 million, compared to a loss of $ 120.5 million in the prior year period.
“The pandemic has created a favorable environment as buyers more concerned with value look for ways to finance online purchases on an ongoing basis,” wrote MKM Partners analyst Rohit Kulkarni in a pre-IPO note to customers.
Affirm works with banking partners that originate many of the company’s loans.
Levchin sees great opportunities ahead, arguing that “we are still in the early days of what payments and money are like” and calling the financial services sector perhaps the largest in the world along with energy. Affirm has expanded its merchant base, which now totals more than 650,000 brands, and the company has agreements with companies like Walmart Inc. WMT,
and David Yurman, who incorporate in-store financing elements along with online ones.
Another area with potential is customer loyalty. “I learned not to advertise products in advance the hard way,” said Levchin, although he noted that there is “a huge opportunity to reward customers for bringing their money to the merchants they love.”
The offer comes as the Renaissance IPO ETF IPO,
gained 22% in the last three months and like the S&P 500 SPX,
increased 8.5% in the same period.