Affirm shares plummet on weak guidance

Affirm shares fell by about 20% after a wider-than-expected loss in the most recent quarter and a disappointing forecast for its current fiscal year.

Why it's the BFD: Despite Affirm's gross merchandise value (GMV) growth, investors are turning away because of the company's continued loss-making in what has become a challenging environment for short-term lending.

By the numbers: Affirm reported a 39% increase in revenue for the quarter, to $364.1 million, and GMV increased 77% in the same period to $4.4 billion.

• But its quarterly loss grew from 38 cents a share in the prior year’s fourth quarter to 65 cents a share, exceeding analysts’ forecasts.
• More worrying, it forecast GMV for the current fiscal year of $20.5 billion to $22 billion, below analyst estimates of $23.28 billion, according to FactSet.

What they’re saying: In his note to investors, Affirm CEO Max Levchin acknowledged that “the growth of online commerce is falling back to pre-COVID levels … ” but “the secular trend toward adopting honest financial products is gaining momentum.”

Of note: The current borrowing environment has Affirm stepping back from making asset-backed securitization deals this year amid rising rates, management said Thursday.

• "The big caveat being that we just don't know," said CFO Michael Linford. "If the market does find a new stable footing, you'll see us be active in the back half of the year."