Affirm (AFRM) stock has gained more than 50% over the last three months, helping it turn positive for the year. The stock has been quite volatile ever since its January 2021 IPO, when it priced the shares considerably above its pricing range at $49. It's worth noting that the company had previously delayed its IPO in 2020 as both DoorDash (DASH) and Airbnb (ABNB) soared on their initial listings, and Affirm apparently did not want to leave too much on the table for its own IPO investors.
As things turned out, even the delayed IPO and bumped-up pricing did not deter early AFRM bulls, as the stock gained 90% on the listing. AFRM went on to hit an all-time high of $168.52 in November 2021, which it hasn’t been able to revisit since. The nearest it came was in August 2025 when the stock hit $100.
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www.barchart.com AFRM Stock Has Been Quite Volatile
Meanwhile, 2020-2021 was a different epoch altogether, particularly for loss-making growth companies, and realism started settling in 2022 as the era of cheap money ended with the Fed’s multiple rate hikes. It did not help that Peloton (PTON)—which was Affirm’s biggest revenue driver then—saw a reversal in its fortunes as its sales tumbled once gyms reopened after the Covid-19-related restrictions were lifted.
AFRM stock crashed 90% in 2022, hitting its all-time low of $8.62 in December. However, the recovery was also spectacular, and it rose fivefold in 2023, making it the best-performing stock that year among U.S. tech companies with a market cap above $5 billion. The price action would suffice to say that a name like Affirm is not for conservative investors. However, the stock has given ample buying and selling opportunities. I have traded in and out of the stock occasionally and most recently bought the dip earlier this year. With AFRM stock now up sharply from its 2026 lows, let’s explore whether it’s a buy or a sell.
Affirm Is Among the Best Growth Stories
Affirm is the biggest pure-play buy-now-pay-later (BNPL) company in the U.S., an industry that is seeing strong adoption. However, strong growth has also attracted newer players to the market, and in 2020 PayPal (PYPL) launched its “Pay in 4” to let users pay in four interest-free installments. Apple (AAPL) also entered the space in 2023, which raised fears of it eating the lunch of established players like Affirm. However, to its credit, Affirm has held its ground and has been a shining example of execution, delivering on top-line growth while becoming sustainably profitable. This is something that most startup companies that listed between 2020 and 2021 lacked and have since either become irrelevant or simply gone out of business.
Here are some of Affirm’s recent numbers. In the most recent quarter, its gross merchandise value (GMV) rose 35% year-over-year (YoY), marking the 10th consecutive quarter when the metric increased by over 30%. Its active consumers rose 22% to 26.8 million, of which 4.4 million are also active on the Affirm card, while transactions per active consumer rose to 6.7. The active merchants on its platform rose 41% to 515,000.
The growth in these operating metrics is flowing into the top line and bottom line, and in fiscal Q3 2026, Affirm’s revenues rose 33% while adjusted operating income rose nearly 62% to $281 million. In his shareholder letter, CEO Max Levchin perhaps best summed up and said, “While top-line growth continues at a very brisk pace, Affirm is maturing like fine wine further down the P&L.”
www.barchart.com While there have been concerns about the health of the U.S. consumer amid the spike in energy prices earlier this year, Affirm is quite upbeat about the financial health of its consumers. In the fiscal Q3 shareholder letter, Levchin said, “We see neither a change in demand nor in our consumers’ ability to repay.” Incidentally, prudent underwriting has been one of Affirm’s strengths, which has helped it keep delinquencies under check. The company has also achieved GAAP profitability, which is no mean feat given the volatile macro environment.
Don't Rush to Buy AFRM Stock After the Rally
All said, while I have been bullish on Affirm in general, its valuations have at times been a breaking point. Currently, the stock trades at a forward price-to-earnings (P/E) multiple of almost 50x, which might appear stretched in a silo but is not that bloated given the kind of growth Affirm has been delivering. That said, at these levels, I don’t see much margin of safety in AFRM stock and would be using any further rise to trim my positions and take profits off the table.
On the date of publication, Mohit Oberoi had a position in: AFRM , PTON . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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