By Mackenzie Tatananni

Affirm Holdings stock slid in premarket trading Friday after the buy now, pay later company issued weak fiscal fourth-quarter guidance. Despite management's assertions that tariff-related uncertainty would have little to no effect on the company's success, analysts were divided.

While Affirm's fiscal third-quarter earnings topped analysts' estimates, a conservative outlook for the current quarter appeared to be weighing on shares Friday. Management guided for fourth-quarter revenue in the range of $815 million to $845 million.

Analysts polled by FactSet had forecast revenue of $841.4 million before earnings were released, above the midpoint of the range.

J.P. Morgan analysts led by Reginald Smith reiterated an Overweight rating on the shares, but lowered their price target to $69 from $74 to account for "macro uncertainty."

While growth in gross merchandise volume -- a key metric that represents the total dollar amount of all transactions on the platform -- accelerated from the previous quarter, "bucking broader spend and retail trends," the analysts noted that Affirm's revenue and gross profit beats were smaller than previous quarters.

The company said it had yet to see any tariff-related weakness, but the below-consensus outlook might indicate an anticipated slowdown in consumer spending ahead.

Still, management remains optimistic. In Affirm's quarterly shareholder letter, CEO Max Levchin asserted that the company had "all the tools necessary to manage our business effectively in any macroeconomic environment."

The CEO noted that Affirm had navigated periods of macroeconomic stress in the past, most recently in 2020, and subsequently in 2022 and 2023 when the Federal Reserve raised interest rates to combat post-pandemic inflation.

Other firms were more optimistic about the stock's near-term prospects. Evercore ISI analysts led by Adam Frisch maintained an Outperform rating and boosted their price target to $56 from $50.

"Overall, the print was really solid and confirmed both the continued robust growth of the BNPL space and AFRM's strong positioning within the segment," the analysts wrote.

Despite the conservative guidance, "we didn't see anything in the print to suggest that shares won't advance in the near-term," the analysts continued, adding they expect to see upside even against a backdrop of tariff-related selloffs.

The firm initiated coverage on Affirm in April. The slight boost to estimates came after the analysts concluded "they were likely a little too conservative amidst a more ominous backdrop when we initiated coverage."

Shares were down 7.4% at $50.23 in premarket trading Friday. Futures tracking the benchmark S&P 500 were up 0.3%. PayPal Holdings, one of Affirm's BNPL peers, was trading flat.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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May 09, 2025 08:01 ET (12:01 GMT)

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