Affirm stock surges 15% as CEO Levchin notes continued consumer strength

Affirm's stock experienced a remarkable surge of 15% on Friday, following the company's impressive fiscal fourth-quarter earnings that exceeded Wall Street's expectations. Heading into the earnings report, the stock had already risen 31% this year, significantly outperforming the Nasdaq's 12% increase. In terms of performance, Affirm reported earnings of 20 cents per share, nearly doubling the predictions set by analysts. Revenue also surpassed estimates, reaching $876 million, which marks a 33% rise compared to the same quarter last year. The company reported a net income of $69.2 million, a stark contrast to a loss of $45.1 million in the previous year's quarter. In addition, Affirm provided optimistic guidance for fiscal 2026 and the upcoming quarter. CEO Max Levchin expressed confidence in consumer strength and momentum in the U.S. during an investor call on Thursday. He stated, "We feel quite excellent about our ability to get paid back on time." A key point of concern before the earnings release was whether the loss of Walmart to competitor Klarna would negatively impact results. However, Affirm's key volume metric soared by 44% compared to the same quarter last year, outperforming expectations by nearly a billion dollars, driven by partnerships with Shopify and Amazon. Since going public in 2021, Affirm has faced increased competition in the e-commerce sector as Klarna gains market share and prepares for its IPO. Nevertheless, Affirm continues to strengthen its relationships with major retailers, including a significant deal with Apple last year. The company's business is closely linked to consumer spending, particularly with its online loans being popular among sellers of electronics, apparel, and travel. Following a contraction in the first quarter due to a surge in imports ahead of tariffs, the U.S. economy expanded by 3.3% in the second quarter, exceeding initial estimates. This growth reflects the resilience of consumers and businesses amidst tariff fluctuations. Moreover, Affirm has been aggressively pushing its Affirm Card, aiming to increase adoption at the point of sale. This strategy is proving effective, as card gross merchandise volume (GMV) surged by 132% to $1.2 billion, and the number of active cardholders nearly doubled to 2.3 million, with in-store spending climbing by 187%. Additionally, zero-percent APR loans have more than tripled, now comprising approximately 14% of total card volume. Levchin also pointed to artificial intelligence as a significant advantage for the company, revealing that early implementations of Affirm's new AdaptAI system have yielded an average 5% increase in merchant volume, highlighting Affirm's ongoing commitment to leveraging machine learning for credit scoring and checkout optimization.