Key insights
- The author expresses a bullish outlook on Affirm due to its potential to consolidate the durable goods financing market. Affirm's high repeat customer rate and strong GMV growth compared to competitors like Klarna suggest significant market share gains. Low delinquency rates further support the positive assessment, indicating a healthy loan portfolio and potential for future growth in the consumer finance sector.
The market for financing durable goods—like appliances and furniture—is ripe for consolidation. While these transactions were traditionally handled by a disparate network of small banks, fintech platforms like Affirm offer a more cohesive user experience. Given the high rate of repeat usage among existing customers, Affirm has the potential to capture significant market share from traditional lenders by centralizing the point-of-sale financing process
BNPL is still only 1.5% of the retail market leaving massive runway for growth. Affirm has consistently grown its users by nearly 24% each year. With Gross Merchandise volume growing closer to 36% (Klarna by comparison only grew 9.3% GMV). Not only is the user base growing but 96% of its users are repeat customers with transaction volume per user growing at a pace of 20%. 30 day delinquencies hover around 3%. Those numbers drop considerately at 90 days with a delinquency average of only 0.8%. Meaning most users bring there accounts up to date when given the time.