Affirm’s IPO Takes Off Like a Rocket Ship

Consumer lending fintech Affirm (ticker: AFRM) went public on the Nasdaq Wednesday and saw their stock take off. Shares were up almost 100 percent from an initial listing price of $49, well above the increased price range target of $41 to $44. Affirm’s shares closed the day at $97.24.

Affirm has quickly become one of the hottest fintech companies in North America as consumers began using the company as an alternative to the traditional credit card. Stay at home orders forced consumers to shop online and Affirm was well positioned to take advantage of this behavior shift.

The company was founded in 2012 by PayPal Co-Founder Max Levchin (watch his previous LendIt Fintech keynotes here and here) to offer consumers simple and straightforward credit. Affirm does not charge late fees and you can purchase many products using Affirm with no interest whatsoever. Affirm makes money with a fee paid by the merchant or through a simple interest charge paid by the consumer.

Levchin explained the vision today on Twitter: “More than eight years ago, we set out to take on credit cards and change the way we pay. We built Affirm from the ground up to align with the needs of consumers and merchants and to succeed when they succeed. We have served millions of consumers through thousands of merchant partners, including some of the biggest brands in the world, all without ever charging a single late fee or penny of deferred interest.”

Buy now pay later, or BNPL as it is often referred to as, has become a huge winner during the pandemic. Millions of people across North America live paycheck to paycheck and offering a simple credit solution over a few monthly installments has helped them to obtain a variety of goods and services.

Affirm has faced some criticism for their partnership with Peloton, which, according to their S-1 filing, accounted for 30 percent of total revenue for the three months that ended on September 30, 2020. While that is Affirm’s biggest partnership the company has a broad range of partners including the likes of Shopify and Walmart.

The successful debut is another win for fintech overall. Fintech has had a rocky history in the public markets but recent performance has indicated a potential turning point for the industry overall with Upstart having a successful IPO and SoFi in the process of completing a SPAC merger with Social Capital Hedosophia Corp V.

Todd is the Chief Product Officer of LendIt Fintech.

He is the host of PitchIt: the fintech startups podcast, a weekly interview show featuring emerging fintech founders and leading venture capitalists.

He is responsible for leading the content team which covers fintech through daily & weekly email newsletters, editorial, virtual events, and in-person conferences.

He has been covering fintech, banking, and venture capital for more than 15 years, including speaking regularly at industry events.

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