On Friday, fintech company Affirm Holdings, Inc (NASDAQ: AFRM) stock gained after the company announced a long-term capital partnership with Sixth Street to invest up to $4 billion in Affirm loans. The stock gave up the gains in the trading session.
Through its Asset Based Finance platform, Sixth Street will invest up to $4 billion by purchasing Affirm loans in a unique AssetCo structure pursuant to a three-year forward flow agreement.
The transaction represents the most significant capital commitment Affirm has secured to date.
It provides additional off-balance sheet funding, allowing Affirm to extend up to more than $20 billion in loans over the next three years as the company continues to scale its payment network.
In October, SoFi Technologies, Inc (NYSE: SOFI) announced a $2 billion loan deal with funds managed by Fortress Investment Group to develop SoFi's capabilities in its loan platform business.
Affirm reported its first-quarter revenue of $698.47 million versus $496.54 million a year ago, which topped the analyst estimate of $664.01 million. EPS loss of 31 cents beat the consensus loss estimate of 35 cents. Affirm expects second-quarter revenue of $770 million and $810 million.
JPMorgan's Reginald L. Smith flagged a $65 billion leap in the fintech sector's market cap since mid-September, backed by third-quarter results, rate cuts, and post-election tailwinds. Smith called Kaspi (NASDAQ: KSPI), Affirm, and Shopify Inc (NYSE: SHOP) the top fintech winners.
Affirm continues to leverage the growing popularity of Buy Now, Pay Later (BNPL) services by strengthening its partnerships with Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), and Shopify Inc (NYSE: SHOP).
Smith emphasizes Affirm's robust credit metrics and dependable funding sources as distinguishing factors. The company aims for profitability by fiscal year 2025.
Affirm Holdings stock surged 50% year-to-date. Investors can gain exposure to the stock through Amplify Digital Payments ETF (NYSE: IPAY) and Amplify ETF Trust Amplify Online Retail ETF (NYSE: IBUY).
Price Action: AFRM stock is down 1.31% at $67.87 at last check on Friday.