Affirm stock price forecast after falling back to earth

Affirm (NASDAQ: AFRM) stock price crashed to a record low even after the company upgraded its forward guidance. The shares crashed to $26.22, which was the lowest on record and about 85% below its all-time high. Its total market capitalization has crashed to about $6.38 billion, which is substantially lower than where it was in 2021.

Affirm strong guidance

Affirm is a leading buy now, pay later (BNPL) company that has become extremely popular among young people. Instead of using expensive credit cards, these people prefer using its product to buy products without paying interest.

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

Affirm does not charge interest. Instead, it makes money by taking a cut for all products it processes through its platform. It also makes a significant amount when people fail to make their payments on time.

The company and the broader industry has been in a strong growth in the past few years. As a result, the biggest players in fintech have all ventured into the sector. 

For example, PayPal is now offering BNPL solutions in Japan while Block acquired AfterPay in 2021. Most analysts believe that Block overpaid considering it spent $29 billion. Today, its total market cap has crashed to about $55 billion.

The main reason why the Affirm stock price crashed to an all-time low was that it reportedly delayed an asset-backed securities sale after a major investor backed out.

At the same time, investors reacted mildly to its guidance. The firm expects its GMV to be about $3.71 billion in Q1 compared with the previous range of $3.61 billion and $3.71 billion. It also boosted its revenue guidance for the year.

The current dip may provide a good buying opportunity considering that the company is now cheap. Also, there is a likelihood that investors will buy growth stocks after the Fed starts hiking rates. This is known as selling the rumour and buying the fact. 

Affirm stock price forecast

The daily chart shows that the AFRM stock price has been in a strong bearish trend in the past few months. Along the way, the shares have managed to cross the key support level at $46.29, which was the previous all-time low. 

Along the way, the shares have moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level. 

Therefore, for now, the path of the least resistance for the stock is lower, with the next psychological level being at $20. In the long-term, the shares will likely rebound as investors buy the dip.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

1. Etoro, trusted by over 13m users worldwide. Register here >
2. bitFlyer, simple, easy to use and regulated. Register here >