Affirm loans purchased by PGIM Fixed Income for $500M

SAN FRANCISCO - Affirm Holdings , Inc. (NASDAQ: NASDAQ:AFRM), a company that offers a payment network empowering consumers and aiding merchant growth, and PGIM Fixed Income, part of Prudential (LON:PRU) Financial (NYSE: NYSE:PRU), have completed a significant transaction. Affirm, currently valued at $21.48 billion, has shown remarkable momentum with a 137% surge in stock price over the past six months, according to InvestingPro data. PGIM Fixed Income, a leading global fixed income manager with $859 billion in assets under management, has concluded an inaugural private purchase of $500 million in loans from Affirm.

This strategic move strengthens the existing relationship between the two firms, where PGIM Fixed Income has previously participated in Affirm’s public asset-backed securitizations. Affirm, a prominent issuer in the asset-backed securities market, has conducted 21 securitizations, totaling nearly $10 billion, with over 130 unique capital partners.

Edwin Wilches, Managing Director and Co-Head of Securitized Products at PGIM Fixed Income, expressed confidence in the expansion of their origination relationships and identified Affirm’s assets as providing compelling risk-adjusted returns for clients. The growth of the pay-over-time industry positions Affirm’s assets as an attractive investment opportunity, according to Wilches.

Brooke Major-Reid, Chief Capital Officer at Affirm, highlighted the company’s rigorous approach to underwriting, which has attracted top investors and bolstered Affirm’s credit outcomes. Major-Reid welcomed the enhanced partnership with PGIM as a milestone in strengthening Affirm’s funding platform and leveraging the company’s momentum.

Affirm has demonstrated a significant growth in its funding capacity, which has increased by over 50% in the last two years, now standing at $16.8 billion as of September 30, 2024. The company also reported $28 billion in gross merchandise volume for the twelve months ending on the same date. InvestingPro analysis reveals impressive revenue growth of 46.55% and a strong liquidity position with a current ratio of 17.58, though analysts don't expect profitability this year. For deeper insights into Affirm's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, covering over 1,400 US stocks. Affirm serves more than 19 million active consumers, offering a transparent and flexible payment alternative without late or hidden fees.

This transaction is based on a press release statement and further cements the collaboration between Affirm and PGIM Fixed Income, underscoring the evolving dynamics in the financial services industry, particularly within the fixed income and consumer credit sectors. While the stock has shown strong momentum, InvestingPro's Fair Value analysis suggests the stock may be currently overvalued, with additional insights available through InvestingPro's extensive financial metrics and analysis tools.

In other recent news, Affirm Holdings Inc. has reported strong first-quarter results and is preparing for a UK market launch. The company's revenue growth of 46.55% over the past year has been bolstered by new partnerships with retailers such as Agape Diamonds, Discount Tires, Ever/body, and others, expanding its merchant network by 20% to over 320,000 partners globally. BofA Securities and Mizuho (NYSE:MFG) Securities have both raised their price targets for Affirm, maintaining a Buy and Outperform rating respectively, following the company's impressive gross merchandise value (GMV) growth and strong Residual Loan to Cost (RLTC) performance.

Affirm's strategic moves include a partnership with Visa (NYSE:V) to introduce the "Flexible Credential" payment feature in the United States, allowing users to access multiple accounts and funding sources with one card. This recent development, along with the company's expansion into the UK market, reflects Affirm's commitment to meeting the demand for long-term payment products.

Affirm's strong first-quarter performance was highlighted by COO Michael Linford, who noted improvements in revenue as a percentage of GMV, driven by interest income, capital market benefits, and merchant fees. The company anticipates Real Lender Total (EPA:TTEF) Cost (RLTC) margins around 3.8% for Q2, indicating a path to sustainable profitability. These recent developments are shaping the financial technology landscape, with Affirm's operations and growth strategies supported by a secure funding situation and strong demand from partners.

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