2 Big Red Flags for Affirm Stock
Buy-now-pay-later company Affirm (NASDAQ: AFRM) beat analyst estimates across the board when it reported results for the fiscal fourth quarter, which ended on June 30. Gross merchandise volume rose 25% year over year to $5.5 billion, revenue jumped 22% year over year to $446 million, and the company reported an adjusted operating profit in positive territory.
But while Affirm's report looked generally positive on the surface, there are two warning signs that investors shouldn't ignore.
Affirm's revenue grew at a solid double-digit rate in the fourth quarter, driven by higher volumes running through the company's platform and higher interest rates on loans. The percentage of loan originations that carried an APR above 30% topped 20% in the fourth quarter as Affirm rolled out its 36% APR rate cap.
Source Fool.com
