Can Affirm's Low-Ticket Purchases Outgrow Its Big-Ticket Categories?

Affirm Holdings, Inc. AFRM is redefining its growth story by focusing on smaller, everyday purchases that used to be on the sidelines of its business. Traditionally known for financing big-ticket items like electronics, travel, home furnishings and luxury items, the company is now strategically targeting low-ticket items that consumers buy more often. This move could transform customer engagement, increase transaction volume and capture a larger share of consumer spending.

By allowing customers to buy everyday items in installments, AFRM makes it easier for people to use its platform more often. Over time, these repeated interactions can build loyalty and turn casual shoppers into regular users. In the first quarter of fiscal 2026, AFRM witnessed 52% year-over-year growth in total transactions, with 96% of repeat customers.

The company’s platform is evolving beyond installment loans. With features like tap-to-pay, QR code checkout and AI-powered underwriting for responsible lending, smooth app integration enhances user experience. These tools make low-ticket purchases easier, safer and more convenient, strengthening customer trust. In the first quarter, the company posted $933 million in revenues, up 34% year over year, along with 42% growth in GMV.

However, big-ticket purchases certainly provide AFRM with strong value per transaction, but smaller purchases create numerous opportunities for customer interactions. As AFRM gains more visibility in everyday retail, both online and in physical stores, low-ticket activity could take on a bigger role in driving scale. And if executed well, it might even outpace big-ticket sales growth over time.

How Are Competitors Faring?

Some of AFRM’s competitors in the fintech space are Klarna Group plc KLAR and Visa Inc. V.

Klarna recently launched its Tap to Pay feature across 14 European markets, bringing its flexible-payment ecosystem directly into brick-and-mortar retail at scale. Klarna’s broader ecosystem also continues gaining momentum, supported by 114 million global active users and 3.4 million daily transactions.

Visa continues to be a frontrunner in the world of global payments, driving adoption of tap-to-pay and other contactless solutions. Its vast network of merchants ensures fast, secure transactions across platforms. V’s processed transactions increased 10% year over year in fiscal 2025.

Affirm’s Price Performance, Valuation & Estimates

In the year-to-date period, AFRM’s shares gained 13.4% compared with the industry’s rise of 5.9%.

From a valuation standpoint, AFRM trades at a forward price-to-sales ratio of 5.12, above the industry average of 4.79. AFRM carries a Value Score of D.

The Zacks Consensus Estimate for Affirm’s fiscal 2026 earnings implies 566.7% growth from the year-ago period. The consensus mark for fiscal 2026 revenues indicates 26% year-over-year growth.

Affirm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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