What Happened?
Shares of buy now, pay later company Affirm (NASDAQ: AFRM) fell 6.2% in the afternoon session after its key competitor, Klarna, announced plans to proceed with its long-awaited U.S. initial public offering. The Swedish “buy now, pay later” company announced it aims to raise up to $1.27 billion by selling over 34 million shares. As a major competitor to Affirm, Klarna's entry into the U.S. public markets signals intensifying competition in the financial technology space. This development may be prompting investors to reconsider Affirm's valuation, particularly after the stock's strong 40% year-to-date surge, with some analysts suggesting the stock had become relatively expensive even before this new competitive pressure emerged.
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What Is The Market Telling Us
Affirm’s shares are extremely volatile and have had 55 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 12.7% on the news that 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.
Affirm is up 31.5% since the beginning of the year, and at $82.20 per share, it is trading close to its 52-week high of $88.46 from August 2025. Investors who bought $1,000 worth of Affirm’s shares at the IPO in January 2021 would now be looking at an investment worth $845.35.
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