Why shares of Affirm Holdings were down over 16% in July

But shares promptly regained that lost ground on Monday after Square announced the purchase of Affirm peer Afterpay.

| More on:
woman working at office

Image source: Getty images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Wild fluctuations in the share price of fintech company Affirm Holdings (NASDAQ:AFRM) continue. After skyrocketing in value following its IPO in January, Affirm has been trending downwards, and a widespread tech growth-stock sell-off in the spring didn't help. Shares were down 16.4% during the month of July, valuing the buy-now, pay-later company at a market cap of just over $17 billion at the end of the month.

So what

Affirm had started to make up some ground in June after it announced a partnership with e-commerce software giant Shopify (NYSE:SHOP). Specifically, Affirm will be powering the Shop Pay Installments service, giving potentially many tens of thousands of merchants the ability to offer flexible payment terms to consumers and capitalizing on the fast-growing, buy-now, pay-later (BNPL) movement. But Affirm isn't alone in this nascent industry. PayPal Holdings (NASDAQ:PYPL) has a similar product, and fellow BNPL upstarts Klarna and Afterpay are also making waves. Though it's growing fast, Affirm still operates at a loss, so it's no surprise shares took another leg down in July in volatile trading action. However, the stock came roaring back on the first trading day of August after Square (NYSE:SQ) announced on Aug. 1 it's acquiring Affirm's peer Afterpay (OTC:AFTP.F) for $29 billion. Affirm nearly made up all the ground it lost in July following Square's announcement.

Now what

Speculation is swirling that Affirm could become an acquisition target as well. Digital payment and financial service technologists are quickly adding new capabilities to their suite of services to attract new users, and Affirm's torrid pace of growth (83% year-over-year increase in gross merchandise volume to $2.3 billion, in the first quarter of 2021) would be a valuable asset to the right firm. For now, though, Affirm is still independent and finding lots of new partnerships to unlock its full potential. Whether it becomes a takeover target, this is a top name in fintech to keep an eye on. Affirm will announce results on Sept. 9, in the fourth quarter of fiscal 2021.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nicholas Rossolillo and his clients own shares of PayPal Holdings, Shopify, and Square. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Affirm Holdings, Inc., PayPal Holdings, Shopify, and Square. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings, long January 2023 $1,140 calls on Shopify, and short January 2023 $1,160 calls on Shopify. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Digital rocket on a laptop.
Broker Notes

Is the Nvidia share price on course to reach US$1,400?

You betcha, says one analyst.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Could Nvidia become the most valuable stock on earth?

Can anything stop the Nvidia stock price?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
International Stock News

What can ASX investors learn from Warren Buffett's latest buys and sells?

We've just found out what Buffett's been buying and selling recently.

Read more »

electric vehicle such as Tesla being charged at charging station
International Stock News

Why Tesla stock tanked in January

Will the electric vehicle leader see earnings decline once again in 2024?

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

Will Nvidia stock be worth more than Microsoft by 2030?

The graphics giant has been growing at a much faster pace than Microsoft, but can it sustain that momentum?

Read more »

Man with hands in the middle of two items with money bags on them.
International Stock News

Stock-split watch: Is Tesla next?

Stock splits are fun. But how much substance there is in Tesla splitting its stock is debatable.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
International Stock News

Yes, Microsoft is a star AI stock, but this is what really powered its solid second-quarter results

Deep involvement with artificial intelligence (AI) has made the company popular with investors, but that isn't (yet) the top motor…

Read more »

Search toolbar with a finger pointing to it.
International Stock News

Why Alphabet stock was sliding today

Shares of the tech giant pulled back on weaker-than-expected ad revenue in its fourth-quarter report.

Read more »