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Are Rising Credit Concerns Recasting Affirm (AFRM)’s Funding Model As A Competitive Vulnerability?

Simply Wall St · 3d ago
  • Recently, analysts warned that Affirm Holdings could be vulnerable as higher borrowing costs and rising default rates put extra pressure on lenders focused on subprime and near-prime consumers.
  • The concern centers on Affirm’s lack of the scale and funding advantages enjoyed by major banks, which may leave it more exposed if consumer credit quality weakens further.
  • We’ll now explore how mounting worries about credit losses and borrowing costs could affect Affirm’s previously optimistic investment narrative.

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Affirm Holdings Investment Narrative Recap

To own Affirm, you have to believe that its buy-now-pay-later model, underwriting tools and growing merchant network can support attractive economics even when consumer credit is under pressure. The recent warnings about higher borrowing costs and rising defaults go straight to today’s biggest risk: credit losses and funding costs squeezing margins. At the same time, they could test the key short term catalyst, which is Affirm’s ability to keep scaling volumes without a sharp deterioration in loan performance.

Against that backdrop, Affirm’s latest quarterly results on 6 November 2025 matter more. The company reported revenue of US$933.34 million and net income of US$80.69 million for the first quarter, after turning profitable in full year 2025. Those figures give investors fresh data on how the business is absorbing funding costs and credit risk at scale, which is central to judging whether the growth story still justifies the current valuation.

Yet behind the growth story, investors should be aware of how rising delinquencies could interact with Affirm’s heavy exposure to U.S. consumer health...

Read the full narrative on Affirm Holdings (it's free!)

Affirm Holdings' narrative projects $6.0 billion revenue and $756.6 million earnings by 2028. This requires 22.9% yearly revenue growth and about a $704 million earnings increase from $52.2 million today.

Uncover how Affirm Holdings' forecasts yield a $92.71 fair value, a 15% upside to its current price.

Exploring Other Perspectives

AFRM 1-Year Stock Price Chart
AFRM 1-Year Stock Price Chart

Eighteen members of the Simply Wall St Community currently see Affirm’s fair value anywhere between US$25.09 and US$140, with several clusters around the US$70 to US$95 range. When you weigh those views against concerns about consumer credit stress and higher borrowing costs, it becomes clear why you may want to compare multiple perspectives before forming your own expectations for the business.

Explore 18 other fair value estimates on Affirm Holdings - why the stock might be worth as much as 73% more than the current price!

Build Your Own Affirm Holdings Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.