Affirm (AFRM) will report quarterly results on 8/28 after the close with the Street at ($0.47) EPS and $605.4M in Revenues and Q1/FY25 forecasts at ($0.49)/$625M and ($1.66)/$2.75B, the latter implying 22% topline growth following 42.2% growth in FY24. AFRM shares have closed lower the last two reports and six of the last eight, a six-quarter average max move of 18.4%.

AFRM is building the next generation platform for digital and mobile-first commerce giving consumers increased purchasing power and more control and flexibility. For merchants, Affirm’s commerce solutions help drive growth by enhancing demand generation and customer acquisition. AFRM recently held an Investor Day detailing its recent Apple partnership and massive forward opportunity as the BNPL leader. AFRM recently posted its fourth consecutive quarter of accelerating GMV growth for Affirm. Credit performance was stable and yield outperformed. AFRM may also seek additional partnerships like PayPal to quickly expand its distribution reach while limiting its brand and technology development expenses. SHOP is one of AFRM’s key merchants and coming off a strong quarter.

AFRM has a market cap of $9.7B and trades 5.4X EV/Sales and 4.5X Cash. Last week I noted that Klarna appears to be near an IPO valuing it at 8X trailing revenues making AFRM look cheap at 4.6X. AFRM made a key strategic shift in June when it agreed to a deal with Apple Pay. For the past 18 months, AFRM has delivered steady beats/raises and any indication of profitability sooner than the consensus can send shares 10-15% higher. The biggest risk is lower discretionary spending among lower to middle income consumers though BNPL continues to take share of overall consumer spending.

Analysts have an average target of $36 and short interest is elevated at 7.75% of the float but steadily moving lower all year. Goldman Sachs recommended being long AFRM calls for earnings. BAML upgraded to Buy with a $36 target on 7-30 seeing GAAP profitability closer while positive on lower interest rates and new/expanded partnerships while credit risks remain well-controlled. JPM raised its target to $45 last week while Goldman in June assumed shares Buy with a $42 target citing differentiated underwriting and a vast distribution network giving it a key advantage in BNPL. Mizuho sees the new Apple relationship driving an incremental $12B opportunity, or 35% above the FY25 consensus.

On the chart, AFRM found solid support in August at the AVWAP from 2023 lows and AVWAP off the highs sits at $36.70 while retracement levels stand at $33.80, $37.40 and $41. MACD on the weekly is getting very close to a bull cross and RSI crossed the 21MA and back over the key 50 level. The rising 200MA is at $34.45.

AFRM options are pricing in an 11% earnings move and 30-day IV Skew at 0 compares with the +0.4 52-week average. AFRM’s put/call open interest ratio is at the 10^th percentile and average IV30 crush is -24.5%. AFRM has seen strong bullish activity recently with more than 10,000 June 2025 $50 calls bought to open while large buys also seen in September $31.5 and $32 calls. AFRM also with a buyer of 5000 January 2026 $25 ITM calls recently, buyers in January 2025 $35 calls with 7000 in open interest and a large buy in June for January 2025 $27.50 calls. A trader on 5/24 sold 1500 March $35 puts to open.

Trade to Consider: Given the strong options positioning and positive fundamentals I think AFRM can trade up to $40-$45 by year-end but $35 may be a target for this report.

September $30/$35/$40 Call Butterfly Spreads at $1 Debit Offer a Great Risk-Reward