I first put Affirm Holdings (AFRM) in the Danger Zone in October 2021, reiterated my bearish opinion on the stock multiple times, and named it a Zombie Stock in September 2022.
Since my original report AFRM is down 81% while the S&P 500 is down 1%, but the stock is up 90+% year-to-date (YTD), movement that is untethered to reality. With a recently confirmed, yet undisclosed SEC investigation ongoing and the New York Fed’s recent findings that “those with lower credit scores and greater unmet credit needs make up a disproportionate share of all buy now pay later (BNPL) users”, the stock is looking increasingly overvalued. I believe that the company cannot meet the future cash flow expectations baked into its stock price.
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