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2021-10-15
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Affirm: Guidance Is Even Better Than It Looks
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":824875487,"tweetId":"824875487","gmtCreate":1634305827853,"gmtModify":1634305924077,"author":{"id":3575936957429593,"idStr":"3575936957429593","authorId":3575936957429593,"authorIdStr":"3575936957429593","name":"alvernsim","avatar":"https://static.tigerbbs.com/c2fe3d62fe9cea4c6c6e6417f045322d","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":18,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Ok</p></body></html>","htmlText":"<html><head></head><body><p>Ok</p></body></html>","text":"Ok","highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/824875487","repostId":1144702308,"repostType":4,"repost":{"id":"1144702308","pubTimestamp":1634305256,"share":"https://www.laohu8.com/m/news/1144702308?lang=&edition=full","pubTime":"2021-10-15 21:40","market":"us","language":"en","title":"Affirm: Guidance Is Even Better Than It Looks","url":"https://stock-news.laohu8.com/highlight/detail?id=1144702308","media":"Seeking Alpha","summary":"Summary\n\nAffirm's shares continue to soar higher. But at the same time, this company's story continu","content":"<p><b>Summary</b></p>\n<ul>\n <li>Affirm's shares continue to soar higher. But at the same time, this company's story continues to improve.</li>\n <li>Discussing Affirm's profitability profile and whether lackluster profit margins matter.</li>\n <li>Affirm is priced at 22x forward revenues. For a leading BNPL player, this is a fair price.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b74c01bdec967d1b16c9b0688e0aa8b5\" tg-width=\"1536\" tg-height=\"1262\" width=\"100%\" height=\"auto\"><span>solitude72/iStock via Getty Images</span></p>\n<p><b>Investment Thesis</b></p>\n<p>Affirm (AFRM) has seen its sizzling hot stock soar lately. Yet, as investors look forward to its guidance, there are even more reasons to be bullish on this name.</p>\n<p>Yes, the stock is not cheaply valued at 22x next year's revenues. But keep in mind, this is the going price for high-growth names in general. But in the case of Affirm, it's anything but another me-too company, it's the leading Buy Now Pay Later player in the US.</p>\n<p><b>Revenue Growth Rates And Guidance Discussed</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d48efc1efea8fde9b0ed9fafde5ccc4d\" tg-width=\"640\" tg-height=\"259\" width=\"100%\" height=\"auto\"><span>Source: Author's calculations, **company guidance</span></p>\n<p>Affirm's guidance for fiscal 2022 presently points towards 39% revenue growth rates. This growth rate is clearly a step down from<i>69% y/y Affirm's top-line growth in fiscal 2021.</i></p>\n<p>What investors are hoping for is that management is being incredibly conservative with its guidance and that Affirm has left plenty of room to positively impress investors.</p>\n<p>Next, perhaps most critical to consider is from the graphic above we can see that Q1 2021 is Affirm's most difficult lapping quarter. If Q1 2021 is being guided to grow by 44% y/y relative to the same period a year ago, then the remainder of the year will be a breeze for Affirm.</p>\n<p>Indeed, Q1 2021 was up nearly triple digits while Q2 2021 saw a dramatic step down to just 57% y/y growth. That means that when Affirm reports its guidance for Q2, investors will have a lot to be content about.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5edaae8a0e7427c44278d47e2ee0d913\" tg-width=\"635\" tg-height=\"417\" width=\"100%\" height=\"auto\"><span>Data by YCharts</span></p>\n<p>And to be absolutely clear, it's not like investors have not stood up and taken notice of Affirm. Investors have seriously taken notice, yet the biggest detractors from the stock simply laid their bearish thesis on Affirm's valuation. And while I note that stock is far from cheap, there's a lot more here at play to consider.</p>\n<p><b>Why Affirm? Why Now?</b></p>\n<p><img src=\"https://static.tigerbbs.com/12bc0892e82fd3c8245361f241058046\" tg-width=\"640\" tg-height=\"514\" width=\"100%\" height=\"auto\"></p>\n<p>Affirm's stock was going nowhere fast, up until it announced its non-exclusive deal with Amazon (AMZN). At that point, the stock popped and hasn't looked back. Why was the non-exclusive deal with Amazon such a big deal?</p>\n<p>Firstly, it provides Affirm with plenty of awesome marketing. It's basically saying that Amazon chose Affirm to delight its consumers, why isn't your company?</p>\n<p>Secondly, the contributions to GMV from Amazon aren't factored into Affirm's fiscal 2022 guidance. Presently, Affirm is testing stages with Amazon. This will be a game-changer for Affirm once it's rolled out.</p>\n<p>Thirdly, partnering non-exclusively with Affirm will improve mind share with consumers. For a company still in the early stages of its growth trajectory into disrupting the credit card industry, this is a huge win for Affirm. Affirm, like countless other BNPL platforms, is in land-grab mode.</p>\n<p><img src=\"https://static.tigerbbs.com/0a89ee5b5d98192147f96a975a065ba8\" tg-width=\"640\" tg-height=\"134\" width=\"100%\" height=\"auto\"></p>\n<p>In fact, as you can see above, at first, customers only average 2 transactions over the first 12 months of adopting Affirm, but after 12 months, customers become habitual users of the platform. And we know that habits become hard to break.</p>\n<p><b>Do Profits Actually Matter in a Bull Market?</b></p>\n<p><img src=\"https://static.tigerbbs.com/3f1c26eabc4e7854cda35e62a998a0d0\" tg-width=\"664\" tg-height=\"495\" width=\"100%\" height=\"auto\"></p>\n<p>As you can see above, Affirm's profitability profile had been improving, with<i>Q1 2021 reporting negative 5% of adjusted profitability,</i>and with the passage of the remainder quarters, there was a noticeable improvement in overall profitability, ending with<i>Q4 2021 at a positive 5%.</i></p>\n<p>However, its guidance for Q1 2021 now points to a huge reversal, with its adjusted operating margins expected to arrive at a<i>negative 25%</i>- hence, this is obviously far from satisfying.</p>\n<p>That being said, readers should keep in mind that its adjusted operating margins guidance for the rest of fiscal 2022 is pointing to a negative 11%. This implies that the remainder of fiscal 2022 should see a meaningful improvement in its bottom-line profitability.</p>\n<p>All this being noted, I doubt that investors are seriously considering Affirm's profitability profile. For now, Affirm is a growth story stock, through and through.</p>\n<p><b>Valuation - Not Cheaply Priced</b></p>\n<p>On most traditional metrics, Affirm is far from cheap. Presently, it's priced at 22x forward sales. Compared with Visa (V) and Mastercard (MA), both of these transaction processing companies are priced cheaper at approximately 16x forward sales (after normalizing for year-end periods).</p>\n<p>Furthermore, the two more established payment titans are insanely profitable, with higher than 50% GAAP profit margins.</p>\n<p>Affirm, on the other hand, isn't likely to sustainably recognize GAAP profitability for some time. And when Affirm finally does become sustainably profitable, its profit margins aren't likely to be particularly high for a considerable amount of time, perhaps not even within the next decade.</p>\n<p>On a positive note, if we consider its convertible notes and funded debt on its balance sheet, Affirm carries a net cash position of approximately $1.4 billion. This is a fair amount of cash for Affirm to go about its land-grabbing strategy.</p>\n<p><b>The Bottom Line</b></p>\n<p>Affirm continues its rapid growth rates and taking market share in a highly lucrative market. All considered, the stock is still attractively priced.</p>\n<p>Affirm is priced at $36 billion. Could it become a $70 billion market cap company? It's a difficult question to answer which squarely is contingent on Affirm's ability to solidify its leading position in the BNPL space. That being said, for what's at play, the leading BNPL, I believe that paying $36 billion is attractive.</p>\n<p>In a nutshell, this is ''a firm'' buy.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Affirm: Guidance Is Even Better Than It Looks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAffirm: Guidance Is Even Better Than It Looks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-15 21:40 GMT+8 <a href=https://seekingalpha.com/article/4459881-affirm-afrm-stock-guidance-better-than-it-looks><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nAffirm's shares continue to soar higher. But at the same time, this company's story continues to improve.\nDiscussing Affirm's profitability profile and whether lackluster profit margins ...</p>\n\n<a href=\"https://seekingalpha.com/article/4459881-affirm-afrm-stock-guidance-better-than-it-looks\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AFRM":"Affirm Holdings, Inc."},"source_url":"https://seekingalpha.com/article/4459881-affirm-afrm-stock-guidance-better-than-it-looks","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1144702308","content_text":"Summary\n\nAffirm's shares continue to soar higher. But at the same time, this company's story continues to improve.\nDiscussing Affirm's profitability profile and whether lackluster profit margins matter.\nAffirm is priced at 22x forward revenues. For a leading BNPL player, this is a fair price.\n\nsolitude72/iStock via Getty Images\nInvestment Thesis\nAffirm (AFRM) has seen its sizzling hot stock soar lately. Yet, as investors look forward to its guidance, there are even more reasons to be bullish on this name.\nYes, the stock is not cheaply valued at 22x next year's revenues. But keep in mind, this is the going price for high-growth names in general. But in the case of Affirm, it's anything but another me-too company, it's the leading Buy Now Pay Later player in the US.\nRevenue Growth Rates And Guidance Discussed\nSource: Author's calculations, **company guidance\nAffirm's guidance for fiscal 2022 presently points towards 39% revenue growth rates. This growth rate is clearly a step down from69% y/y Affirm's top-line growth in fiscal 2021.\nWhat investors are hoping for is that management is being incredibly conservative with its guidance and that Affirm has left plenty of room to positively impress investors.\nNext, perhaps most critical to consider is from the graphic above we can see that Q1 2021 is Affirm's most difficult lapping quarter. If Q1 2021 is being guided to grow by 44% y/y relative to the same period a year ago, then the remainder of the year will be a breeze for Affirm.\nIndeed, Q1 2021 was up nearly triple digits while Q2 2021 saw a dramatic step down to just 57% y/y growth. That means that when Affirm reports its guidance for Q2, investors will have a lot to be content about.\nData by YCharts\nAnd to be absolutely clear, it's not like investors have not stood up and taken notice of Affirm. Investors have seriously taken notice, yet the biggest detractors from the stock simply laid their bearish thesis on Affirm's valuation. And while I note that stock is far from cheap, there's a lot more here at play to consider.\nWhy Affirm? Why Now?\n\nAffirm's stock was going nowhere fast, up until it announced its non-exclusive deal with Amazon (AMZN). At that point, the stock popped and hasn't looked back. Why was the non-exclusive deal with Amazon such a big deal?\nFirstly, it provides Affirm with plenty of awesome marketing. It's basically saying that Amazon chose Affirm to delight its consumers, why isn't your company?\nSecondly, the contributions to GMV from Amazon aren't factored into Affirm's fiscal 2022 guidance. Presently, Affirm is testing stages with Amazon. This will be a game-changer for Affirm once it's rolled out.\nThirdly, partnering non-exclusively with Affirm will improve mind share with consumers. For a company still in the early stages of its growth trajectory into disrupting the credit card industry, this is a huge win for Affirm. Affirm, like countless other BNPL platforms, is in land-grab mode.\n\nIn fact, as you can see above, at first, customers only average 2 transactions over the first 12 months of adopting Affirm, but after 12 months, customers become habitual users of the platform. And we know that habits become hard to break.\nDo Profits Actually Matter in a Bull Market?\n\nAs you can see above, Affirm's profitability profile had been improving, withQ1 2021 reporting negative 5% of adjusted profitability,and with the passage of the remainder quarters, there was a noticeable improvement in overall profitability, ending withQ4 2021 at a positive 5%.\nHowever, its guidance for Q1 2021 now points to a huge reversal, with its adjusted operating margins expected to arrive at anegative 25%- hence, this is obviously far from satisfying.\nThat being said, readers should keep in mind that its adjusted operating margins guidance for the rest of fiscal 2022 is pointing to a negative 11%. This implies that the remainder of fiscal 2022 should see a meaningful improvement in its bottom-line profitability.\nAll this being noted, I doubt that investors are seriously considering Affirm's profitability profile. For now, Affirm is a growth story stock, through and through.\nValuation - Not Cheaply Priced\nOn most traditional metrics, Affirm is far from cheap. Presently, it's priced at 22x forward sales. Compared with Visa (V) and Mastercard (MA), both of these transaction processing companies are priced cheaper at approximately 16x forward sales (after normalizing for year-end periods).\nFurthermore, the two more established payment titans are insanely profitable, with higher than 50% GAAP profit margins.\nAffirm, on the other hand, isn't likely to sustainably recognize GAAP profitability for some time. And when Affirm finally does become sustainably profitable, its profit margins aren't likely to be particularly high for a considerable amount of time, perhaps not even within the next decade.\nOn a positive note, if we consider its convertible notes and funded debt on its balance sheet, Affirm carries a net cash position of approximately $1.4 billion. This is a fair amount of cash for Affirm to go about its land-grabbing strategy.\nThe Bottom Line\nAffirm continues its rapid growth rates and taking market share in a highly lucrative market. All considered, the stock is still attractively priced.\nAffirm is priced at $36 billion. Could it become a $70 billion market cap company? It's a difficult question to answer which squarely is contingent on Affirm's ability to solidify its leading position in the BNPL space. That being said, for what's at play, the leading BNPL, I believe that paying $36 billion is attractive.\nIn a nutshell, this is ''a firm'' buy.","news_type":1},"isVote":1,"tweetType":1,"viewCount":853,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":2,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/824875487"}
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