The "No Buy” trend of 2025 making waves on social media encourages being frugal while not succumbing to high-interest credit cards. This trend is favorable for buy now, pay later (BNPL) services like Affirm Holdings Inc. (NASDAQ: AFRM). The pioneer of BNPL facilitates high conversion rates for merchants, turning online window shoppers into paying customers. It competes with Afterpay, owned by Block Inc. (NYSE: SQ), and Sezzle Inc. (NASDAQ: SEZL).
Affirm arranges short-term microloans for its users so they make purchases that are paid off in four bi-weekly payments with no interest. This is a three-way win-win-win dynamic that has finally turned the business services sector company profitable. The customer wins by being able to afford the purchase, and the merchant wins by making a sale that may not have otherwise been made due to the cost. Affirm wins by collecting a fee from the merchant.
The Path to Profitability Has Been Achieved
Affirm posted a surprise profit in the fiscal second quarter of 2025, which was the fourth quarter of the calendar year 2024, the holiday shopping season. The company reported Q4 EPS of 23 cents when consensus estimates were for a loss of 16 cents, beating estimates by 39 cents. Net income improved by $247 million year-over-year (YoY) to $80 million. Revenues surged 46.6% YoY to $866.4 million, crushing consensus estimates of $807.16 million. Gross merchandise volume (GMV), which is the total value of all transactions financed, jumped 35% to $10.1 billion. It was another record-setting holiday season. However, the company is five months away from reaching its target of positive operating income.
Affirm Issues In-Line Guidance
The company issued in-line guidance for fiscal Q3 2025 for revenues between $755 million and $785 million, a midpoint of $765 million versus $772.03 consensus estimates. Fiscal Q4 2025 revenue is expected to be between $810 and $840 million.
Affirm’s Network Syndication Strategy Pays Off for Merchants
Affirm CEO Max Levchin noted that they have seen an increase in 0% loans, which are, in essence, interest-free or reduced-interest financing options that are enabled when merchants donate a portion of their margin. This approach is an attractive offer to consumers, other than traditional discounts, encouraging immediate purchases without compromising price integrity.
Merchants channel promotional funds into these financing offers instead of lowering prices. Affirm’s role is to streamline the process by developing tools that allow merchants to deploy these offers with minimal effort through its platform and its mobile app.
Levchin added, “We have now offered them an opportunity to bring these promotions, eventually syndicate them across the entirety of Affirm, which is to say, they're available in our app, on our card, and across many of the wallets where we're integrated.”
Affirm’s Network Syndication strategy is paying off as the network’s strength comes from its detailed knowledge of product SKUs and transactions, which allows it to create unique reasons for consumers to buy on every platform. As time passes and the strategy develops, more benefits that aren't immediately obvious will emerge, further enhancing the network.
Affirm’s Momentum Builds, But Risks Remain
On the technical side, AFRM recently confirmed a bull flag breakout, signaling continued upside momentum. The stock’s sharp rally formed the flagpole, followed by a controlled pullback within descending trendlines—a textbook consolidation phase. Breaking above the upper trendline and reclaiming $64.50 as support, AFRM has strengthened its bullish setup.
However, risks remain. Competition from Afterpay and Sezzle is fierce, and macroeconomic conditions, such as interest rates and consumer debt levels, could impact BNPL demand. Analysts have an average price target of $70.24, about 12% below current levels, indicating mixed sentiment. Still, Wall Street remains mostly optimistic, with 11 Buy ratings and nine Hold ratings on the stock.
For investors, the breakout presents an opportunity, but patience may be key. Those looking to enter may consider waiting for a pullback before taking a position. If Affirm continues executing its strategy and expanding its merchant partnerships, it could solidify itself as a dominant player in the BNPL space while reshaping consumer finance.
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