By Affirm Inc (NASDAQ: AFRM) opened in the green this morning after private-credit firm Sixth Street agreed to buy up to $4 billion worth of its consumer installment loans.
The transaction marks largest-ever capital commitment for the buy now, pay later company.
Sixth Street has signed a “forward-flow agreement” with Affirm, meaning it has committed the capital even before the loans have originated.
Affirm stock is now up some 200% versus its year-to-date low in early August.
What Sixth Street deal means for Affirm stock
The deal Affirm announced with Sixth Street today allows it to support loan originations worth more than $20 billion over the next three years.
Non-bank lenders have been aggressively buying consumer loans from BNPL names like Affirm in recent months to expand in the asset-based finance market that’s estimated to be worth $5.2 trillion.
The Sixth Street news arrives only days after Prudential Financial bought about $500 million of loans from AFRM.
Others that have loaded up on debt portfolios recently include Blue Owl Capital and Fortress Investment Group.
Note that Affirm stock is still down significantly from its high of $164 in late 2021.
Affirm’s financials speak for themselves
Michael Dryden – the head of asset-based finance at Sixth Street sees “tremendous opportunity in this partnership” as Affirm is unparalleled in offering flexible and scalable financing solutions.
“We look forward to being a key funding partner and continuing to build on this relations to support the company’s [AFRM] growth in the years to come,” he added in a press release on Friday.
Affirm’s gross merchandise volume (GMV) surpassed $28 billion in the 12 months through September.
Last month, the buy now, pay later company reported better-than-expected financial results for Q1.
AFRM narrowed its per-share loss on a year-over-year basis to 31 cents as revenue increase 41% to $698 million.
Affirm now expects to hit GAAP profitability in the final quarter of 2025.
Affirm stock to extend rally in 2025
Affirm’s current-quarter guidance for revenue and GMV also surpassed analysts’ forecasts at the time.
That’s part of the reason why BTIG analyst Vincent Caintic sees upside in AFRM to $81.
His price target indicates potential for another 14% upside from current levels.
Caintic expects financial technology companies “to occupy much of the debate in 2025”.
He’s convinced that a sharp increase in volume and solid operating income margins will drive Affirm stock furth up in 2025.
Other notable recent developments at Affirm include UK expansion, team up with Apple Inc, and the roll out of Affirm card.
These initiatives will likely help the company unlock future growth as well.
Our market analyst Crispus Nyaga also expects Affirm shares to enter beast mode in 2025.
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