Why I initiated a position in AFFIRM

Hi Readers,

I initiated a small position in Affirm Holdings (Ticker: AFRM) at USD$113. This is a small starter position which I initiated which allows me to dip my toes in the 'Buy Now Pay Later' trend. Below are some of the reasons why I began the position.







1. The rising trend of 'Buy Now Pay Later' and the possible disruption of existing credit card companies

Credit card companies like Visa and Mastercard charge hefty fees with every transaction and Buy Now Pay Later companies like Affirm provide an alternative for consumers to split up their purchases to monthly payments with no interest (if they pay on time).  

In Affirm's latest quarter earnings , 
- Recorded revenue growth of 71% YOY
- Gross Merchandise Value up 106% YOY
- Active consumers grew 97%  up to 7.1 Million YOY
- Active merchants up 412% to 29,000

2. Huge Total Addressable Market (TAM)

Based on the global payments report 2021, BNPL will grow 181%, from 1.6% of all e-commerce transactions in 2020 to 4.5% in 2024. This growth is significant and represents huge tailwinds for many of the BNPL companies like Affirm

3. Partnerships with Companies

Affirm has been quick to partner with huge companies like Amazon, Shopify and Walmart. Refer to the news below for Walmart's partnership news with Affirm. 

https://www.foxbusiness.com/retail/walmart-layaway-affirm-holiday-season

Of course these are not exclusive partnerships, but being a first mover, this can put Affirm in great stead for the upcoming years if consumers like the product.



UPCOMING CATALYSTS

1. Debit card roll out

Affirm will issue the Affirm card to allow users to make purchases in real life in store. This can accelerate the transactions per customer. Based on CEO Max Levchin, he claims in a Yahoo finance interview that Affirm has nearly a million people on the waitlist for the Affrim+ debit card.

2. Upcoming Holiday Season

We are close approaching the holiday season, and this can be a great catalyst for growth. Big holidays such as Black Friday and Cyber Monday and especially Christmas will definitely see huge upside in their transaction volumes. The partnership with Amazon was announced in time for the holiday season as well.

3. Return of Travel

As countries start to lift covid restrictions, this is good news for Affirm as many merchants will be using Affirm's BNPL service, and we can potentially see a good uptake in transaction volumes due to pent up demand in spending. 

4. Crypto Investing

Max Levchin has announced crypto investing to be available to customers with a savings account with Affirm and this can be a huge revenue generator ( see Coinbase's growth).


RISKS

As with all investments, there are always risks. Definitely the most prominent risk would be that this market is saturated with BNPL players such as Afterpay (acquired by Square), Klarna. Even companies like Grab are offering their own BNPL solution. Companies that are the first movers may benefit the most due to first mover advantage. 

Due to this risk, my position in AFRM is just a starter position. But I am very positive on the growth of AFRM and I can the strong leadership allowing AFRM to standout in this saturated marketplace.





To all the readers : Thank you for the support, and please let me know what is the financial content that you are interested in, I will share more. You can email me at jjfinancialblog@gmail.com. 


Thank you for the few readers that signed up with my Moomoo and Tiger Broker links, your support is very much appreciated. 

Hope the above information is useful for the readers, if you find them useful and if you have not yet signed up with Moomoo or Tiger Broker, please use my referral link to sign up for them. These promotions given by these brokers are for a limited time only and I would appreciate the support given to me. 



1. MOOMOO

https://j.moomoo.com/005XGg



2. TIGER BROKER

https://www.tigersecurities.com/activity/forapp/invitflow-intl/signup.html?template=invite202011&invite=H5XD7L



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