Affirm shares drop 13% on weak forecast, concerns over CEO's bet on 0% loans
Drew Angerer | Getty Images
Affirm shares plunged on Friday after the fintech company issued a weak forecast, and investors questioned CEO Max Levchin's plan to go big in 0% loans.
The buy now, pay later lender said revenue this quarter will be between $815 million and $845 million. The midpoint of the range was short of the $841 million average analyst estimate, according to LSEG.
Levchin, who founded the company in 2012, is trying to bolster growth with 0% loans, a strategy he says gets consumers in the door and potentially turns them into long-time customers. Levchin told CNBC's 'Squawk Box' that it's a way to build customer loyalty, even if it means sacrificing margins today.
'We are helping people understand that not paying interest, revolving interest, excessively is a good thing,' he said. 'We're taking share from credit cards.'
Those loans now make up 13% of Affirm's total Gross Merchandise Volume (GMV), with 80% coming from prime and super-prime customers. Affirm's core business involves issuing point-of-sale installment loans to consumers buying items like apparel, electronics and sporting goods.
While GMV topped analysts' estimates, Affirm's revenue less transaction costs (RLTC) missed the Street's expectations, in part due to the surge in 0% APR loans. For the quarter, the company beat on earnings and delivered revenue that was inline with estimates.
Analysts at Citizens maintained their market outperform rating on the stock, but noted in a report that the increase in 0% loans 'led to a lower take rate and RLTC margin than most forecasts.' And analysts at BTIG, who have a buy rating on the stock, wrote that 'Affirm shares are down precisely because the RLTC/take-rate weakness wasn't offset by more rapid GMV growth.'
Levchin said that despite economic uncertainty, consumers are continuing to spend and that Affirm's credit performance remains 'solid' and 'consistent.'
'People are stressed out about the economy, yet they're shopping, they're buying, and they're paying their bills — at least they're paying their bills back to us on time,' he said.
With Friday's slide, Affirm shares are down about 22% for the year, while the Nasdaq is off about 7%.
Some analysts remain bullish. Susquehanna, Bank of America , and TD Cowen all upgraded the stock or raised price targets due to what they see as growth potential.
Goldman Sachs maintained a buy rating on Affirm, calling it a 'strong category leader in BNPL and a share gainer vs. legacy credit providers.'
Barclays , which has the equivalent of a buy rating, called the quarter a 'solid print' despite high investor expectations. The firm cautioned that the stock could see short-term underperformance, but is bullish on new partnerships, like a recent agreement with Costco.
Levchin emphasized the importance of playing the long game.
'It took consumers and merchants and sort of the universe about a decade to figure out what we are and just how different and important what we have found to work really is,' he told CNBC.
WATCH: Affirm Holdings falls more than 10% despite surprise beat
READ SOURCE
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
43 minutes ago
- Yahoo
2 Top Dividend Stocks Duke It Out. Which Is Better?
Key Points On top of its regular dividend, Costco also occasionally pays out a much bigger special dividend. Both companies increased their dividend this year. Valuation is ultimately what makes one stock a better buy than the other. 10 stocks we like better than Alphabet › When investors think about dividend stocks, they usually start with high-yielding names. Utilities, telecoms, and big consumer staples often dominate the conversation. But sometimes the best dividend opportunities come from companies with low payouts. That's where membership-based wholesale retailer Costco (NASDAQ: COST) and Google parent Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) come in. Both yield less than 1%, making them easy to dismiss for income. Yet, both are outstanding businesses with excellent dividend growth prospects. Costco, specifically, delivers incredible stability and even pays occasional special dividends on top of its regular dividend. Meanwhile, Alphabet has a brand-new payout and is one of the cheapest valuations among big tech. But which one of these two dividend growth stocks edges out the other when compared head-to-head? Costco: Dependable income at a high price Costco has a reputation for consistency, and its dividend reflects that. The company's payout is below 30%, leaving plenty of room for business reinvestment and steady dividend increases over time. Additionally, Costco has increased its dividend every year for more than two decades, with an annual growth rate of around 13% in recent years. The latest raise came this spring, when management boosted the quarterly dividend to $1.30. That puts the annual payout at $5.20 and the dividend yield at roughly 0.5%. Notably, Costco offers more than just its regular dividend. From time to time, the company pays special dividends, too. In early 2024, for instance, shareholders received a $15 special dividend. These extra payouts can make a big difference for long-term holders, even though they come only occasionally. The issue with Costco, however, is the stock's valuation. Shares trade at more than 50 times earnings, a very high multiple for a stock that grew its sales and earnings per share 8% and 13%, respectively, in its most recent quarter. That premium reflects both the quality of the business and investors' willingness to pay up for its reliability. But such a lofty valuation leaves little margin for error. Even though sales and earnings continue to grow at a healthy pace, today's stock price already bakes in years of strong performance. Investors buying now should expect modest returns from here unless Costco delivers upside surprises. Alphabet: Small yield, big upside Alphabet only started paying a dividend in 2024, so it doesn't have Costco's long track record. The payout is small, with an annual dividend of $0.84 per share and a yield of around 0.4%. But the payout ratio is less than 10%. That leaves huge room for growth if management decides to raise the dividend in future years. The company is also aggressively investing in its business (perhaps explaining why management increased its dividend by only 5% this year). Capital expenditures are surging as Alphabet builds out its artificial intelligence (AI) and cloud infrastructure. Sure, this has weighed on free cash flow in the short term. But investors should remember that these investments are aimed at capturing long-term growth opportunities. Making the case for Alphabet stock even stronger, the internet search and cloud computing company's growth story benefits from a diversified set of key revenue sources -- and they're all doing well. Alphabet's advertising business remains strong, YouTube continues to expand, and Google Cloud is gaining ground. Unlike Costco, valuation is a bright spot for Alphabet. Shares trade at about 21 times forward earnings -- a much lower multiple than tech peers like Microsoft and Meta and far below Costco. That's unusual for a company still posting strong double-digit growth in both revenue and profits. Revenue and operating income both increased 14% year over year in the company's second quarter of 2025. With earnings growth like this, Alphabet could ramp up its dividend in a big way down the road (though it might have to get through a period of high capital expenditures first as it invests aggressively in growth). A clear winner Costco and Alphabet may both look like low-yield stocks, but they represent two very different kinds of dividend investments. Costco is the steady option. It offers a safe payout, regular increases, and the occasional special dividend. But investors pay a steep price for that safety, which limits future returns. Alphabet, by contrast, has only just begun rewarding shareholders with dividends. The yield is tiny but could grow substantially over time. More importantly, the tech stock's valuation is much cheaper than Costco's. For investors willing to accept a small payout today in exchange for better long-term potential, Alphabet is the clear winner. Should you invest $1,000 in Alphabet right now? Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,106,071!* Now, it's worth noting Stock Advisor's total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Costco Wholesale, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 2 Top Dividend Stocks Duke It Out. Which Is Better? was originally published by The Motley Fool
Forbes
an hour ago
- Forbes
Why Your Electricity Bill May Be Skyrocketing
PHOENIX: The Palo Verde Nuclear generating plant, until recently the nation's largest nuclear power plant, is seen between two Saguaro cactus in Phoenix, Arizona. (Photo by) Getty Images Over the past month, friends, family, and acquaintances have asked why their electricity bills have skyrocketed. One friend wrote, 'I am curious if you have any thoughts about why electric bills are doubling and, in some cases, tripling? People in my area are in shock. In two months, my bill doubled.' I live in Phoenix, and we actually have reasonable electric bills because we are served by the Palo Verde Generating Station. Despite the intense heat here, my electric bill never rises above $300 except in July. More on that later. That's not the case everywhere. From the Midwest to the Southeast, people are seeing bills that are several times higher than that. What's driving these sudden spikes isn't just 'using more power' or 'a hot summer.' The reality is more complex, and it won't be easy to solve. Here are the five biggest forces reshaping your electric bill. The surge in artificial intelligence has unleashed a gold rush in data center construction, and it's quickly becoming one of the most powerful forces driving electricity demand. These facilities are energy-intensive, often consuming 30 times more electricity than traditional data centers. A single AI center can draw as much power as 80,000 homes, and by 2030, data centers are projected to require 30 GW of new capacity—the equivalent of 30 nuclear reactors. To meet this demand, utilities are scrambling to add transmission lines and upgrade grid infrastructure, with those costs inevitably showing up on customer bills. At the same time, utilities that sell power into competitive markets—rather than operating under regulated rate caps—are seeing a windfall. Texas-based NRG Energy, for example, has seen its stock price triple in just two years, as soaring wholesale prices boosted profits. Natural gas powers about 40% of U.S. electricity generation, and U.S. liquefied natural gas (LNG) exports have risen by nearly a factor of seven in the past seven years to over 13 billion cubic feet per day. That means when Asian or European buyers bid up LNG cargoes, U.S. households indirectly feel it in their electricity bills. Put simply, you're now competing with the world for the same fuel—and global demand is strong. A year ago, at this time, the spot price of natural gas in the U.S. was about $1.00 per Million Btu cheaper than it is this year. That translates directly into higher electricity bills this year. July 2025 saw record-breaking temperatures across much of the country, with a 'heat dome' trapping high humidity and driving peak demand to 758,149 MWh in a single hour—a national record. Air conditioning loads surged, and in many regions, utilities had to buy expensive spot-market electricity to meet demand. That cost gets socialized across monthly bills. The U.S. grid is old and straining under new loads. More than 70% of transmission lines and transformers are over 30 years old. Replacing and upgrading them is both essential and expensive. Delivery charges—the part of your bill that covers the poles, wires, and transformers needed to move electricity—have climbed sharply in recent years. For households, that means even if fuel costs ease or demand moderates, the higher cost of maintaining and upgrading the grid will likely keep electricity prices from returning to the levels we saw just a few years ago. Finally, policy isn't keeping up. The repeal of clean energy tax credits under the so-called 'Big Beautiful Bill' slowed renewable deployment. At the same time, permitting bottlenecks have delayed new transmission and generation. Layer on top of that the electrification push—EVs, heat pumps, electric appliances—and electricity demand is rising faster than utilities can build capacity. The mismatch creates structural upward pressure on rates, regardless of short-term market moves. While millions of Americans are grappling with sticker shock, there are notable exceptions—regions that enjoy stable or even declining electricity prices, thanks to their unique energy mix. Phoenix is one of them. As previously noted, despite triple-digit temperatures, my own bill rarely exceeds $300, largely because the Palo Verde Generating Station provides stable, low-cost nuclear power. Nuclear plants offer a huge advantage: their fuel (uranium) isn't tied to volatile global gas markets, and their reactors run around the clock at high capacity factors. It also doesn't hurt that Arizona has seen a 187% increase in wind and solar power over the past decade, and the state ranks 3rd nationally in installed battery storage capacity. Other regions also benefit from abundant local resources: Idaho: The lowest average rates in the nation at just 11.9 cents per kWh, thanks to hydroelectric power (which can be impacted by droughts). Pacific Northwest (WA, OR): Wholesale prices are falling in 2025 due to strong hydropower and growing solar generation. Texas (ERCOT): Despite surging demand, competitive market dynamics and solar buildout are keeping wholesale prices flat or slightly lower. By contrast, states heavily reliant on natural gas—California, New Jersey, Ohio—are seeing double-digit rate hikes as LNG exports and peak demand drive up costs. It's worth pausing on nuclear. Yes, the upfront capital costs are high, but once plants are built, their operating costs are remarkably stable—about 9.3 cents per kWh, compared to 7 cents for gas and 9.5 cents for coal. Nuclear also avoids carbon pricing and doesn't need backup generation like intermittent renewables. In a grid increasingly stressed by AI demand, climate extremes, and geopolitical risks, nuclear's ability to provide price stability, energy security, and reliability is hard to match. So, why did your bill suddenly double? It's not just about running your air conditioner a little harder. It's about structural shifts in the energy system: AI data centers reshaping demand LNG exports reshaping fuel markets Heat waves stressing supply Aging infrastructure raising delivery costs Policy bottlenecks slowing new capacity At the same time, regions anchored by nuclear or hydro have been shielded from the worst price spikes. That contrast underscores an important truth: the U.S. doesn't face a single energy reality—it faces many, depending on local resources and policy choices. Unless utilities, regulators, and policymakers find smarter ways to expand capacity and modernize the grid, the broader trend is clear: for many households, higher electricity bills aren't just a fluke—they're the new normal.
Yahoo
an hour ago
- Yahoo
1 Beaten-Down Stock That Could Soar by the End of the Year
Key Points Viking's leading weight management candidate is being investigated in two formulations. The stock could soar later this year, provided the oral version aces phase 2 studies. Viking Therapeutics is somewhat risky, but it also has significant upside potential. 10 stocks we like better than Viking Therapeutics › Some smaller drugmakers choose to develop medicines for diseases for which there are no therapeutic options. This allows them to avoid direct competition from larger pharmaceutical companies. That's not exactly the strategy Viking Therapeutics (NASDAQ: VKTX) chose. The mid-cap biotech is working on weight loss therapies, an increasingly competitive market dominated by Eli Lilly (NYSE: LLY) and Novo Nordisk, as well as numerous other well-established players in the industry seeking to enter the space. Going up against these giants is no small challenge, but Viking is, so far, holding its own. And if it can play its cards right, its stock could soar by the end of the year and go on to generate strong returns from then on out. Here's more on Viking Therapeutics. Eli Lilly's setback creates an opportunity Viking Therapeutics' shares soared last year following the release of strong phase 2 data for its subcutaneous weight management candidate, VK2735. The stock has declined significantly since that milestone, although it's not due to anything Viking did wrong. Broader market volatility, combined with long-term shareholders taking some profits, is likely responsible for the stock's 40% drop over the trailing-12-month period. VK2735 is currently in phase 3 studies, but Viking is also developing an oral version of the medicine, which is in phase 2 clinical trials. There is a race to develop a highly effective oral GLP-1 anti-obesity therapy, since the current market leaders are administered via subcutaneous injection. If Viking Therapeutics' oral candidate can impress in mid-stage studies, the stock could soar. That's especially the case since Eli Lilly's investigational oral GLP-1 medicine, orforglipron, failed to perform as well as expected in a phase 3 study in obese or overweight patients who didn't have diabetes. Orforglipron led to a mean weight loss of 12.4% in a 72-week study, which wasn't as impressive as the market wanted. This result paled in comparison to Lilly's injectable Zepbound, which led to an average weight loss of 20.2% in a phase 3 study. Viking Therapeutics' shares jumped on the pharmaceutical giant's bad news, but there's plenty of upside left if its oral weight loss candidate meets Wall Street's expectations. It's best to start small Eli Lilly is perceived as the leader in the weight management market. The company's continued dominance in this field was likely somewhat baked into investor expectations, requiring it to deliver outstanding clinical trial results to justify its share price. Viking is a much smaller drugmaker than Lilly, so the market will likely have lower expectations for its data readouts for VK2735. Viking also has several other exciting candidates. The company is working on a drug called VK2809, a potential therapy for metabolic dysfunction-associated steatohepatitis (MASH), which produced solid results in phase 2 studies. There is a vast unmet need in MASH, considering several million people have the disease, yet the U.S. Food and Drug Administration has approved just a single medication for it. Elsewhere, Viking has a next-gen anti-obesity candidate that could soon start human clinical trials. The company has a lot going on, and if VK2735-related developments remain strong through the end of the year, the stock could soar. However, Viking -- like any clinical-stage biotech company -- is a somewhat risky bet. On the one hand, it has generated strong mid-stage data for two separate medicines that address high unmet needs. Its leading candidate, VK2735, has the potential to become a blockbuster; that's impressive. Even so, the stock will plummet if VK2735 encounters clinical setbacks. So, should you buy shares? In my view, it depends on your level of risk tolerance. Risk-averse investors should look elsewhere. If you're comfortable with a bit of volatility, you should seriously consider the stock; however, it would be wise to start by initiating a small position. If the data from the ongoing phase 2 study for oral VK2735 is good, it might be worth adding even more shares thereafter. Should you buy stock in Viking Therapeutics right now? Before you buy stock in Viking Therapeutics, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Viking Therapeutics wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,106,071!* Now, it's worth noting Stock Advisor's total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Prosper Junior Bakiny has positions in Eli Lilly, Novo Nordisk, and Viking Therapeutics. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy. 1 Beaten-Down Stock That Could Soar by the End of the Year was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
