Affirm Stock Extends Losses on Post-Earnings Bear Note

Affirm Wednesday reported lackluster Q2 results

Deputy Editor
Feb 10, 2023 at 10:12 AM
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Shares of Affirm Holdings Inc (NASDAQ:AFRM) are extending yesterday's dip -- last seen down 2.7% at $12.93 -- following a bear note from Morgan Stanley.

Following Affirm's earnings report, the brokerage downgraded the buy-now-pay-later (BNPL) firm's stock to "equal weight" from "outperform" and lowered its price target to $15 from $46, reasoning that the company's offerings are too limited to match its lofty goals. No less than eight other analysts also slashed their price targets as well.

Affirm Wednesday night reported fiscal second-quarter losses of $1.10 per share on revenue of $399.56, both of which missed Wall Street's forecasts. The company immediately announced a restructuring plan, which includes cutting roughly 19% of its workforce and revaluate its need for leased office space.

On the charts, AFRM closed below the $15 level for the first time since mid-January. The equity is walking into today's session with a more than 35% year-to-date lead, but is down more than 77.5% in the last 12 months.

The brokerage bunch was already pessimistic on Affirm stock, but there remains room for sentiment to shift. Specifically, while 10 covering brokerages recommend a "hold" or worse, six still rate the shares a "buy" or "strong buy." What's more, the 12-month average target price of $16.49 is a 24.1% premium to last night's close. 

Affirm stock has also found itself on the short sale restricted (SSR) list today. At the moment, the 36.58 million shares sold short account for 16.8% of the security's available float.

Options are certainly an intriguing route to consider, as AFRMs Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 84 out of 100. This means Affirm stock has exceeded option traders' volatility expectations during the past year.


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