Affirm (NASDAQ:AFRM) stock is treading water ahead of its June quarter earnings report, which should offer fresh insight into the company’s growth trajectory. Shares were trading at $77, down 11.6% from their high for the year.
Affirm’s Earnings to Shed Color on its Growth
Affirm, a top player in the buy now, pay later (BNPL) industry, will release its financial results this week. These numbers come a week after Klarna (NYSE:KLAR) published weak results, pushing its stock to its lowest level since May this year.
Klarna’s second-quarter results showed revenue rising 27% to $1.04 billion, with profit climbing to $27 million. However, the company reported sharp deterioration in Germany, its largest market by volume, a notable contrast with Affirm, whose biggest market is the US.
According to Benzinga data, analysts expect revenue to rise 26.2% to $1.11 billion, with earnings per share climbing from $0.53 in Q2’25 to $0.82 in the upcoming quarter. Affirm has missed estimates in each of the last three quarters.
The most recent results showed that Affirm’s revenue jumped by 33% to $1.03 billion, with its gross merchandise volume rising by 35% to $11.6 billion.
In addition to its topline and bottom-line figures, the stock will react to its delinquency data. The last earnings report showed that delinquencies rose slightly in the third quarter, partly because of the reduced denominator following the tax refund seasonality. Its allowance for credit losses as a percentage of its loans held for investment rose to 6%.
Top analysts following the company have a bullish outlook for the stock. BMO Capital Markets boosted its target from $78 to $86, while Truist hiked from $80 to $83. Cantor Fitzgerald hiked from $80 to $88, which is in line with the average analysts’ target.
Affirm Stock Has Flashed Bullish Patterns
Technical analysis suggests that the AFRM stock price is about to rebound after earnings. It has formed a symmetrical triangle pattern whose two lines have neared their confluence. This triangle formed after a strong bullish breakout, a sign that it is part of a bullish pennant pattern.
The stock has been forming a multi-month inverted head-and-shoulders pattern, a popular bullish reversal. It has also remained above the 100-day Exponential Moving Average (EMA).
Therefore, the stock will likely have a bullish breakout after earnings. If this happens, the next level to watch will be at $86.90, its highest level on July 7 this year.
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