Affirm Holdings (NASDAQ: AFRM) is getting another vote of confidence from Wall Street as one analyst says several powerful trends could push the stock much higher.
Bernstein analysts, for example, just initiated coverage of the buy now, pay later (BNPL) company with an Outperform rating and a $100 price target. Analyst Harshita Rawat believes Affirm is in the right place at the right time. “Affirm, in our view, is at a unique intersection of several tailwinds – expanding total addressable market (TAM), compounding network effects, and several optionalities,” she said, as quoted by CNBC.
The BNPL Market is Only Getting Bigger
Rawat says one of the company’s biggest strengths is that its market keeps getting bigger.
“The TAM is sizable, no matter how you slice it,” she added. “Affirm’s product velocity has meant that the TAM is also constantly evolving into new verticals, channels, and merchants.”
Even after years of rapid growth, buy now, pay later still makes up only about 5% of U.S. e-commerce sales and just 1% of overall card spending, according to Bernstein. That leaves plenty of room for future growth.
Large retailers are helping drive that trend. Companies like Amazon and Shopify have added buy now, pay later options to their checkout pages because installment payments often increase sales and encourage customers to spend more.
As more merchants adopt the payment option, companies like Affirm could see transaction volumes continue climbing.
The industry itself also looks poised for significant growth.
The global buy now, pay later market was worth about $156.6 billion in 2023. Some forecasts expect that figure to grow to more than $1 trillion by 2028 as more consumers and businesses adopt installment financing.
Consumer spending habits are also changing.
Americans are carrying record levels of debt. Total household debt recently climbed to $18.2 trillion, making many consumers more interested in flexible payment options. And instead of putting large purchases on credit cards, many shoppers are choosing to split payments into smaller installments.
In addition, the market is still relatively small compared with traditional credit card spending, yet adoption continues to accelerate. With strong partnerships, growing consumer demand, and a rapidly expanding market, AFRM appears well positioned to benefit from one of the fastest-growing trends in financial technology. For investors looking for exposure to the fintech sector, AFRM could be one of the strongest growth stories over the next several years.
Sincerely,
Ian Cooper
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