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Affirm (AFRM) stock is tanking despite posting a third quarter earnings beat and raising its fourth quarter guidance. Mizuho Americas senior financial technology analyst Dan Dolev joins Wealth to discuss the stock moves and earnings results, highlighting why he sees the market reaction as a case of expectations mismanagement.
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Affirm shares falling. After the buy now, pay later firm reported quarterly results, they were overall positive with a beat on the top and bottom line and raised fourth quarter guidance. The midpoint of the Q4 revenue guidance did fall below the street's expectations. Some analysts say the stock's move lower is not necessarily a cause for concern. Here to dive into the results, we've got Dan Dolev, who is the Mizuho America's senior financial technology analyst. I just want to get your own analysis here with Affirm.
Yeah, I mean, look, I think the what's happening today is just an expectations management problem more than any other problem. So there was, uh, there's some like third-party data that tracks credit card receipts and they were telling investors that the results are going to be like X, and I think that might have fallen short of, of that expectation. And but it's it's really they they beat their guide. They upped the guide. In this environment, upping the guide is like a really strong sign, right? Uh, they're telling you that even in a recession, uh, they're not going to do as badly as people think. And by the way, we've done some proprietary work that shows you that there the uh, the lower rates that come with the recession can more than offset the decline in volume, uh, from tightening the credit box. So taken together all of this stuff, I mean, I think it's a huge buying opportunity right here.
And so with this in mind, as we're taking a look at the full year forecast here on the screen, what are some of the keys for this company, especially knowing that the core customer that they're going after is one that's perhaps looking at opportunities to kind of offset some of those large purchases or space them out in an environment where they might feel a little bit more pressured about some of those discretionary dollars?
So they're getting, it's a great question. They're getting into more partnerships right, like the one with Costco, for example. Uh, they're going internationally, right? They're going into Europe. Uh, they're in the UK right now. So they're making, they're taking share away from Klarna. We've proven that before. So that's like a big thing, right? They're, they're basically crushing them. So they're taking measures that should more than offset sort of the single, kind of call it same store sales or same customer sales if their core customer, uh, doesn't consume as much over time. So it's idiosyncratic success story, and that's what we really like about Affirm.
