Deep Research

Affirm (AFRM)

3 min read

Snapshot

  • Ticker: AFRM (Nasdaq)
  • Bucket: Consumer, Fintech & Housing
  • Q1 2026 position: $54.7M — 1,194,711 common shares, 1.09% of 13F
  • HQ: San Francisco, California
  • What it does: Buy-now-pay-later / point-of-sale lending network spanning merchants (Amazon, Shopify, Walmart historically), a consumer app, and the Affirm Card.

Business Overview

Affirm originates installment loans at the point of sale, monetizing through merchant fees, interest income, and loan sales/securitization. The model has scaled past its skeptics: fiscal 2025 (ended June 30, 2025) GMV was 3.22B, and Q4 FY2025 delivered 43% GMV growth alongside GAAP net income of $114M — the profitability milestone that long eluded the BNPL category.

Momentum continued into fiscal 2026: Q1 FY2026 (Sept 2025 quarter) revenue was 10.8B GMV; Q2 FY2026 (Dec 2025 quarter) revenue reached 13.8B GMV (+36%). Management guides FY2026 GMV above $46B with adjusted operating margin above ~26% and GAAP operating margin above 6%. Growth drivers are the Affirm Card (extending BNPL into everyday offline spend), 0% APR merchant-funded promotions, and expanding funding capacity via forward-flow agreements with private credit buyers.

Financial Trajectory

Fiscal year (ends June)GMVRevenueNotes
FY2024~$26.6B~$2.3BGAAP unprofitable
FY2025$36.7B$3.22BQ4 FY25 GAAP net income $114M
FY2026 (guide)>$46B~8.4% of GMVAdj. op. margin >26%

Q2 FY2026 actual: revenue 13.8B (+36% YoY).

Why Atreides Owns It

Affirm sits at the intersection of two things Atreides cares about: consumer fintech share gains against legacy credit cards, and a credible AI/data story — underwriting at the transaction level is a machine-learning problem where Affirm’s decade of loan-level repayment data compounds. It is also a high-beta proxy for the US consumer, which is exactly how the fund has traded it (see below): pressing the position when the consumer-credit picture and rate outlook improve, cutting hard when funding costs or credit normalization threaten the model.

There is no specific public Baker presentation on Affirm; the holding reads as an actively traded expression of the consumer/fintech bucket rather than a buy-and-hold compounder position like Mastercard.

Position History

QuarterTypeShares/NotionalValue% of 13F
Q4 2024Common144,206$8,782,1450.19%
Q1 2025Common307,453$13,893,8010.42%
Q2 2025Common1,977,882$136,750,7613.79%
Q3 2025Common207,905$15,193,6970.30%
Q4 2025Common1,384,941$103,081,1591.26%
Q1 2026Common1,194,711$54,741,6581.09%

One of the most violently traded names in the book: a small Q4 2024 position grew to nearly 2M shares (103M to $55M on a similar share count) reflects the stock falling roughly 40%, not just selling. The pattern is consistent with trading conviction around a volatile underlying rather than a stable core position.

Risks

  • Consumer credit deterioration: delinquencies and charge-offs rise in a weakening labor market, hitting both loan economics and funding costs.
  • Funding dependence: the model relies on continuous access to loan buyers and securitization markets; a private-credit pullback widens spreads quickly.
  • Competition: Klarna (now public), Afterpay/Block, PayPal, and card issuers’ own installment products compress take rates.
  • Concentration: Amazon and Shopify partnerships are material to GMV; renegotiation or loss would be severe.
  • Regulatory: CFPB and state-level scrutiny of BNPL underwriting, disclosure, and late-fee economics.
  • For Atreides specifically: the whipsaw trading record shows the fund itself treats the name as high-risk; timing errors cut both ways.

Sources

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