The shares of Affirm Holdings Inc. they have almost doubled in the midday price after the financial technology company made its public debut.
Shares of Affirm AFRM,
opened Wednesday at $ 90.90 after trading on the Nasdaq, with the first operation at 12:20 pm ET. The company had an initial public offering price of $ 49 per share on Tuesday afternoon, above an already high range of $ 41 to $ 44 per share. Shares have recently changed hands for just under $ 98.
The company raised at least $ 1.2 trillion through the offer. Subscribers have access to a global batch of 3.7 million shares beyond the original 24.6 million shares Affirm sold through its IPO. Affirm reportedly delayed its IPO since late last year, given the big day shares of Airbnb Inc. ABNB,
and DoorDash Inc. DASH,
Affirm, led by PayPal Holdings Inc. PYPL,
co-founder Max Levchin, offers payment options that allow people to shop online in installments. The company receives compensation from merchants when customers opt for one of Affirm’s loan options. Affirm has an interest-free “0% APR” offer, as well as a “simple interest” loan product through which the consumer is also paid at the end of a transaction.
Levchin told MarketWatch that transparency in terms of how much consumers will pay for a given purchase is becoming “a must-have feature and not a pleasant one” between generations who are currently “financially active” and those who will have to follow suit.
“Revolving credit is a tool that is not as useful as it is dangerous,” he said in an interview after negotiations began. Levchin predicted that most established players would switch to products of simple interest over composite products.
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The company’s largest customer is Peloton Interactive Inc. PTON,
which accounted for approximately 28% of Affirm’s revenue in its last fiscal year ending June. Affirm reported revenue of $ 509.5 million during its most recent fiscal year, up from $ 264.4 million the previous year. The company posted a net loss of $ 112.6 million, compared to a loss of $ 120.5 million in the previous period.
“The pandemic has created a favorable environment as more value-conscious shoppers are looking for ways to finance online shopping in a perfect way,” MKM Partners analyst Rohit Kulkarni wrote in a note prior to the IPO to customers.
Affirm works with banking partners who originate many of the company’s loans.
Levchin sees great opportunities ahead, arguing that “we are still in the early stages of the payments and money aspect” and that we call the financial services sector perhaps the largest in the world alongside energy. Affirm has grown its merchant base, which already exceeds 650,000 brands, and the company has agreements with companies such as Walmart Inc. WMT,
and David Yurman who incorporate in-store financing items along with others online.
Another area that has potential is customer loyalty. “I’ve learned not to pre-advertise products in the hardest way,” Levchin said, though he noted that there are “a lot of opportunities in rewarding customers for bringing their money to merchants they love.”
The offer is presented as the IPO of the Renaissance IPO ETF.
has gained 22% in the last three months and, like the S&P 500 SPX,
has increased by 8.5% in the same period.