What Happened?
Shares of buy now, pay later company Affirm (NASDAQ: AFRM) jumped 12.7% in the morning session after it reported stellar second-quarter results that surpassed Wall Street's expectations and swung to a profit.
For the quarter, the company announced revenue of $876.4 million, a 33% year-over-year increase that beat analyst estimates. Affirm also posted a GAAP profit of $0.20 per share, a significant turnaround from the loss of $0.14 per share recorded in the same quarter last year and well ahead of Wall Street's expectations. Adding to the positive sentiment, management provided an upbeat revenue forecast for the upcoming third quarter, with its guidance of $870 million at the midpoint topping analyst projections.
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What Is The Market Telling Us
Affirm’s shares are extremely volatile and have had 56 moves greater than 5% over the last year. But moves this big are rare even for Affirm and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 7.1% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Affirm is up 41.3% since the beginning of the year, and at $88.31 per share, has set a new 52-week high. Investors who bought $1,000 worth of Affirm’s shares at the IPO in January 2021 would now be looking at an investment worth $908.17.
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