On August 28, Affirm Holdings (NASDAQ:AFRM) gave investors two very different signals in the same breath. The buy now, pay later company posted a fiscal fourth quarter that blew past Wall Street’s numbers, yet CEO Max Levchin used the moment to flag something less comfortable: gas prices are squeezing the very shoppers driving that growth. The stock barely moved on the news, leaving the market to sort out which story matters more.
Momentum That Won’t Quit
The headline numbers were hard to argue with. Revenue rose 33% to $1.17 billion for the three months ended June 30, ahead of the $1.11 billion analysts expected, while gross merchandise volume climbed 36% to $14.1 billion against a $13.39 billion estimate. Adjusted operating income reached $353 million, a 30% margin, and the GAAP operating margin expanded six percentage points to 12.6%. For the full fiscal year, GMV hit $50.2 billion, up from $36.7 billion, on $4.26 billion in revenue.
The user base kept expanding too. Active consumers grew 21% to 27.8 million, and transactions per active consumer rose 20% to 7.0, while the Affirm Card’s active user count more than doubled to 5.2 million. Newly appointed president Michael Linford, who moved into the role Thursday, Aug. 27, after nearly two years as chief operating officer, called it the eleventh straight quarter of GMV growth above 30%. Credit quality held up alongside that growth, with the 30-day delinquency rate improving to 2.5% from the 2.7% to 2.8% range of the prior three quarters, something Compass Point’s Giuliano Bologna called evidence of “resilient credit performance.” Affirm also deepened its Shopify tie-up, extending Shop Pay Installments into Australia after last year’s UK expansion, part of what Linford described as Shopify “pulling us into a new market” as both a partner and shareholder. Susquehanna’s James Friedman raised his price target to $110 from $105, calling the guidance for fiscal 2027 “exceptionally strong.”
The Squeeze At The Pump
Levchin’s own commentary complicated the celebration. “The US consumer undoubtedly sees the higher gas prices, so can’t, can’t ignore that,” he told CNBC, noting shoppers are increasingly turning to Affirm to manage costs across “all the various inflationary points.” The national average gas price sat at $4.09 a gallon as of August 28, down from above $4.50 in May but still well above pre-Iran war levels, and it hasn’t dipped below $3 since March 2. Levchin was direct about the risk: “I do think that sustained pressure on prices isn’t great in the long term, and so can’t ignore that either.”
That pressure sits inside a broader inflation picture. The annual inflation rate stood at 3.7% in July, with the Fed’s preferred gauge, the personal consumption expenditures index, up 0.2% for the month even as personal income and spending both grew. That leaves Fed Chairman Kevin Warsh weighing his next move at a September meeting. Meanwhile, not every analyst is fully on board with the stock. Morgan Stanley’s James Faucette called Affirm “one of the best companies in our coverage” but kept his rating on the sidelines, arguing the valuation already looks “broadly in-line with peers on a growth-adjusted basis.”
How Wall Street Is Pricing It
Hedge fund ownership slipped from 61 funds to 57 in the most recent quarter, a modest pullback even as the business kept beating estimates. Short interest sits at 4.96% of the float, enough to suggest real skepticism without signaling a crowded bear trade. As of August 28, the stock’s forward price-to-earnings ratio of 40.16 shows investors are still paying up for growth. That combination points to a market that likes the fundamentals but isn’t chasing the stock aggressively.
Two Signals, One Stock
Affirm’s quarter proved the growth engine is still running, with GMV, revenue, and user counts all outpacing expectations while credit quality actually improved. But Levchin’s own words on gas prices and inflation are a reminder that the demand fueling that growth is tied to a consumer under some financial strain. For the bull case to keep playing out, that budgeting-driven demand needs to stay durable rather than turn into rising defaults.
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