Affirm Holdings, Inc. (NASDAQ:AFRM) saw its shares plummet 8.77% in after-hours trading on Thursday, despite reporting better-than-expected third-quarter results. The buy-now, pay-later platform beat analyst expectations with a narrower loss of 1 cent per share, compared to the anticipated 3-cent loss. Revenue for the quarter came in at $783.13 million, slightly above the consensus estimate and representing a 36% increase from the previous year.

However, the stock's decline was primarily driven by the company's disappointing guidance for the fourth quarter and fiscal year 2025. Affirm forecasts Q4 revenue between $815 million and $845 million, with the midpoint falling below analyst consensus of $841.6 million. For the full fiscal year 2025, the company expects revenue of $3.163-3.193 billion, also below market expectations. This outlook suggests a potential moderation in growth rate for gross merchandise volume in the coming quarter.

Investors also seem concerned about Affirm's performance in a potentially weakening economic environment. While the company announced a new online partnership with Costco and extended its agreement with Shopify through June 2028, these positive developments were overshadowed by the recent loss of Walmart as a partner. CEO Max Levchin addressed potential economic challenges, stating that Affirm is prepared to manage a recession scenario by adjusting credit approvals. Despite these assurances, the market's reaction indicates ongoing worries about the buy-now, pay-later sector's resilience in the face of economic headwinds.