Affirm & Amazon

Fintech newcomer Affirm (AFRM), a consumer lending company, on Friday announced a partnership with Amazon (AMZN). A limited number of Amazon customers will be able to make instalment payments of $50 or more through Affirm.

Shares in fast-growing online lender Affirm (AFRM) rose sharply on Friday after the close of trading, up 36%.

Affirm has announced that its installment service will soon be available to Amazon.com (AMZN) customers for purchases of $50 or more. The service will initially run in test mode for a limited number of customers, but "Amazon plans to make Affirm more accessible to its customers in the coming months," according to the press release.

While Affirm's share price was $67.9 at the close of trading on Friday (down 30% from the first day of trading), the opening price on Monday could be around $92 per share. If the price stays at that level, Affirm's market capitalisation could rise from $18.55bn to around $23bn. Other Affirm partners include Walmart (WMT), Nordstrom (JWN), RealReal (REAL), Eddie Bauer, Expedia Group (EXPE), Eventbrite (EB), Bonobos, Purple and others.

In May, Affirm published its report for its third financial quarter, which ended on 31 March. Based on the results, the fintech company reported strong growth across the board:

• Revenues rose to $230.7 million, up 67% from the third quarter of fiscal 2020;
• the number of sellers on the Affirm platform more than doubled to nearly 12,000;
• number of active consumers (active consumers) up 60% year-on-year to 5.4 million.
• The number of working capital (GMV) rose 83% to $2.3bn.

Most estimates of the target price for Affirm's shares among Wall Street analysts are well above current levels, with an average estimate of about $100 per share.

At the same time, Affirm operates in a very competitive environment, which could hamper the company's growth. Among fintech companies, alternative consumer lending offerings are growing rapidly. Earlier in August, Square (SQ) struck a $29bn deal to buy Australian fintech company Afterpay.

PayPal (PYPL), Klarna, Mastercard (MA) and Fiserv, American Express (AXP), Citi (C) and JP Morgan Chase (JPM) all offer similar credit services. In addition, Bloomberg reports that Apple (AAPL) plans to launch an installment service in partnership with Goldman Sachs (GS).