The writing was on the wall when Claim (NASDAQ: AFRM) announced the terms of its public debut. While the company may not be a household name, it’s the brainchild of Max Levchin, one of the co-founders of the payment processing kingpin PayPal (NASDAQ: PYPL). The online lender offers financing and installment loans to customers on e-commerce sites.
After initially planning its stock price between $ 33 and $ 38, strong investor interest raised the range to $ 41 to $ 44 per share. On the eve of its debut, Affirm priced its shares above the $ 49 range. Even that was not enough to dampen investor enthusiasm.
Image source: Affirm.
The company’s initial public offering (IPO) followed a repeated pattern in late 2020, when investors bought shares at a dizzying rate. The shares started trading around 12:20 pm EST, at $ 90.90, almost 86% above the offer price, and never looked back. The stock ended the day at $ 97.24, more than 98% above the offer price.
Affirm offered investors 24.6 million shares. If subscribers had exercised their right to sell 3.69 million additional shares, the offering could have raised up to $ 1.38 billion, valuing the company at around $ 23 billion.
For the fiscal year ended June 30, 2020, Affirm reported revenue of approximately $ 509 million, an increase of 92% year on year. At the same time, the company was able to reduce its net loss to $ 113 million, a slight improvement over a loss of $ 120 million the previous year. Affirm’s growth accelerated in the first three months of fiscal 2020, with revenue growing 98% year-over-year to $ 174 million. The company cut its red ink in half, with a net loss of $ 15 million, compared to $ 31 million in the same quarter last year.
It is important to note that Peloton Interactive (NASDAQ: PTON) is Affirm’s largest customer, representing 30% of its revenue in the last quarter.