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AFFIRM HOLDINGS, INC.

(AFRM)
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As 'buy now, pay later' surges, a third of U.S. users fall behind on payments

09/09/2021 | 10:52am EDT
FILE PHOTO: Four thousand U.S. dollars are counted out by a banker at a bank in Westminster

(Reuters) - A third of U.S. consumers who used "buy now, pay later" services have fallen behind on one or more payments, and 72% of those said their credit score declined, a new study published by personal finance company Credit Karma showed.

The study, conducted by software firm Qualtrics, surveyed 1,044 adult consumers in the United States last month to measure their interest in buy now pay later (BNPL) and found 44% had used these services before.

The usage figure was slightly up from a similar survey conducted by Credit Karma for Reuters in December, while missed payments was down from 38%.

The latest survey found younger consumers were more likely to miss payments. More than half of Gen Z or millennial respondents-- those born between the early 1980s and mid-to-late 1990s-- said they had missed at least one payment. That compares with 22% of Gen X, who were born in the early 1960s to early 1980s, and 10% of Baby Boomers, those born between the mid-1940s and 1980.

There has been a surge in usage of BNPL services, which allow consumers to easily split payments for purchases into installments. The boom in volumes by providers such as Klarna, Affirm Holdings, AfterPay Ltd and PayPal Holdings Inc, has been driven in part by online shopping growth during the coronavirus pandemic.

The explosive growth has led to more dealmaking and competition. Earlier this week PayPal announced it would acquire Japanese buy now, pay later firm Paidy, while last month rival Square Inc agreed to acquire AfterPay.

The growth has also led to more scrutiny from regulators who aim to ensure consumers do not take on more debt than they can handle.

"It's easier than ever to purchase an item -- and finance it -- without even thinking about the implications of the purchase," said Colleen McCreary, financial advocate at Credit Karma. "It's this disconnect between making a purchase and actually paying for it where consumers can get in trouble."

Most consumers who used BNPL services said the purchase was for $500 or less, on average. Low-cost purchases were most common among Gen Z, nearly half of which have used BNPL services to pay for expenses of $100 or less, the survey found. 

(Reporting by Anna Irrera. Editing by Jane Merriman)

By Anna Irrera


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AFFIRM HOLDINGS, INC. -1.21% 155.35 Delayed Quote.0.00%
AFTERPAY LIMITED 2.68% 124.3 End-of-day quote.5.34%
PAYPAL HOLDINGS, INC. 0.51% 271.7 Delayed Quote.15.43%
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Analyst Recommendations on AFFIRM HOLDINGS, INC.
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Financials (USD)
Sales 2022 1 200 M - -
Net income 2022 -190 M - -
Net Debt 2022 449 M - -
P/E ratio 2022 -149x
Yield 2022 -
Capitalization 42 752 M 42 752 M -
EV / Sales 2022 36,0x
EV / Sales 2023 26,8x
Nbr of Employees 1 641
Free-Float 54,2%
Chart AFFIRM HOLDINGS, INC.
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Affirm Holdings, Inc. Technical Analysis Chart | AFRM | US00827B1061 | MarketScreener
Technical analysis trends AFFIRM HOLDINGS, INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 11
Last Close Price 157,25 $
Average target price 124,09 $
Spread / Average Target -21,1%
EPS Revisions
Managers and Directors
Max R. Levchin Chairman & Chief Executive Officer
Michael Linford Chief Financial Officer & Secretary
Libor Michalek Director & President-Technology
Jeremy Liew Independent Director
Jeremy G. Philips Independent Director
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