Affirm Crushes Earnings Expectations, Turns Bears into Believers

Among recently released earnings reports, buy-now-pay-later (BNPL) stock Affirm (NASDAQ: AFRM) was one of the biggest standout performers.

After the financial services company released its fiscal Q4 2025 earnings on Aug. 29, shares shot up nearly 11%, and a considerable number of Wall Street analysts raised their price targets on the stock.

AFRM Beats Big on the Top and Bottom Lines, Posts Operating Profit

Affirm posted revenue of over $876 million, which equates to a growth rate of just under 33%, beating consensus estimates of less than 27% growth.

Affirm’s non-adjusted earnings per share (EPS) also came in much better than expected at 20 cents, nearly double the 11-cent analyst consensus forecast. This marks the third quarter in a row in which Affirm has posted positive non-adjusted EPS.

More importantly, Affirm posted its first quarter of positive non-adjusted operating income ($58 million), demonstrating that it is not just a high-growth company. Its core business is now proving that it can actually be profitable, although it will need to continue showing this.

Affirm’s GMV Growth Accelerates, Provides “Amazing” Guidance

Although profitability is trending upward, Affirm's fiscal Q1 revenue guidance does imply a marked deceleration in growth with a midpoint revenue of $870 million, indicating a growth rate of 24.5%. 

Affirm’s gross merchandise volume (GMV) growth is equally as important as revenue growth. This shows the amount of overall spending on the company’s platform, indicating whether it is gaining or losing market share.

And GMV is where Affirm really impressed, growing by nearly 44%—the highest rate in at least the last six quarters. Affirm is projecting GMV growth of at least 25% in fiscal 2026, which would be a steep deceleration from the 38% the company saw the previous year. This partially reflects the fact that most of the volume that Affirm was generating from Walmart (NYSE: WMT) will cease in fiscal Q2 2026.

Despite this, analyst Dan Dolev at Mizuho called Affirm’s guidance “amazing” on the company’s earnings call, suggesting that the negative impact from losing the Walmart relationship was smaller than many expected.

Updated Targets Signal AFRM Is Converting Bears to Bulls

The MarketBeat-tracked analyst consensus price target on AFRM is around $79. That number is not so inspiring, considering it implies over 7% downside compared to where the stock is currently trading. However, zeroing in on forecasts that analysts updated on or after August 29 changes the picture entirely.

Several analysts raised their price targets by 40% or more following Affirm’s earnings. With the average of these revised targets at nearly $97, the stock has more than 13% upside from where it is currently trading, underscoring just how dramatically Affirm’s latest results reshaped its near-term outlook.

The scale of these upgrades highlights just how significantly Affirm’s latest results shifted analyst sentiment, turning what had been a largely cautious outlook into a growing wave of optimism.

The data also signals that Affirm could be in the early stages of a re-rating, where investors begin assigning a higher valuation multiple to the stock. If a re-rating were to take effect, combined with analysts potentially raising their EPS expectations, Affirm could see big-time upside going forward.

AFRM’s Valuation Is Soaring, But the Company’s Strong Results Don’t Lie

Affirm is generating significant momentum in its underlying business and share price. Still, investors should be aware that some of the stock’s key valuation multiples look elevated. 

The company's forward enterprise value to sales (EV/S) ratio is 8.6x, much higher than its average forward EV/S ratio of around 5.8x over the past three years. To justify this valuation, Affirm will need to continue showing that it can grow profitably—and its latest earnings results prove that it can.

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The article "Affirm Crushes Earnings Expectations, Turns Bears into Believers" first appeared on MarketBeat.