Affirm has demonstrated strong growth, with Loop Capital's analyst Reginald Smith noting that the company connects over 27 million consumers with more than 500,000 merchants, generating over $50 billion in annual gross merchandise revenue.
However, consumers transact with Affirm less than seven times a year on average, which presents a significant growth opportunity compared to Visa's average of 70 transactions per card annually.
Smith believes that as Affirm expands its distribution through partnerships with companies like Stripe and Adyen, and as its Visa-branded card taps into a $2.4 trillion market, the company can achieve sustained growth of over 25% in gross merchandise volume and revenue.
Despite a 3% decline in shares this year, Affirm's stock has increased by 42% over the past six months, with a majority of analysts maintaining a bullish outlook, as 28 out of 36 analysts rate it a buy or strong buy.
Smith also pointed out that Affirm, while one-third the size of its competitor Klarna in terms of gross merchandise volume, generates 40% more transaction profit and nine times more adjusted operating profit, indicating a more efficient business model