Affirm Holdings (AFRM  ) is a fintech company that was founded by former Paypal (PYPL  ) CEO and founder Max Levchkin. Recently, the company went public and finished 90% above its pre-IPO price which continues the trend of strong public debuts. The company's mission is to offer "honest financial products that improve consumers' lives."

Affirm offers consumers payment options to give them the choice to pay in installments at the point of sale. The company is utilized by sellers such as Peloton (PTON  ) and Shopify (SHOP  ). Offering consumers this payment option can benefit sellers as it likely increases conversion rates. However, there are concerns that consumers may not understand they are taking out a loan when using Affirm.

Inside the Numbers

Affirm believes that its offer is fair and transparent especially since it doesn't charge compound interest like most lenders. The company is benefitting from the growth in ecommerce especially as more high-ticket items are bought and sold online. Last year, Affirm generated revenue of $509.5 million an increase from $264.4 million a year ago. It had a net loss of $112.6 million, slightly less than $120.5 million in 2019.

Most physical retail stores offer financing options at the point-of-sale. Affirm has created such an option that can be utilized by any ecommerce company. The company partners with banks that finance these loans. The company believes that it has tremendous growth opportunities ahead as ecommerce sales increase, and it partners with more brands as the company continues to prove its ability to increase conversions and order size.

Stock Price Outlook

It's not too surprising to see Affirm's strong debut given the bullish market environment and a relentless appetite for new issues. Some other trends in its favor are that the fintech stocks are outperforming. The pandemic has also been an accelerant as ecommerce sales spiked, while many people had tighter household finances during the pandemic.

Yet, there certainly are valuation concerns. Affirm has a $28 billion market cap which means that it has a price-to-sales ratio of 56. Growth is strong at 98%, but there are some questions about whether it will be able to maintain this trend.

The bulls would argue that Affirm's stock has more upside given that it's a relatively, capital-light business that will be able to continue growing with the digital economy. It has more growth in terms of finding new companies to partner with and in figuring out new ways to help companies increase order size and conversions.