Buy Now, Pay Later Firms’ Earnings Are In. Now They’re Looking for Holiday Growth

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Key Takeaways

• Buy now, pay later providers Affirm and Block saw their stock prices fall Friday.
• The decreases come after investment prices for both companies started to climb in August.
• Affirm told investors it’s looking to build its customer bases during the leave of absence shopping season, which is vital to both it and Block’s AfterPay.

Buy now, pay later (BNPL) providers’ shares reversed their months-long climbs Friday, neglecting ahead of a close to the year seen as vital to expanding their businesses.

Stock prices for Affirm Holdings (AFRM) and Afterpay well-spring company Block (SQ), fell after both fintech companies reported earnings Thursday that largely met or overwhelmed expectations. Shares of both companies, particularly Affirm’s, have generally risen since August.

Affirm reported $698 million in receipts — a 41% increase year-over-year — and $100 million in losses in the first-quarter of its fiscal year. Wall Street expected $663.9 million in gate and net losses of $107.5 million, according to analysts polled by Visible Alpha.

Block reported $5.98 billion in profits, less than the $6.18 billion consensus estimate provided by Visible Alpha. But Block beat Visible Alpha’s $240 million net revenues forecast, reporting $283.7 million in net income and $2.25 billion in profit across Afterpay; Cash App, a consumer fiscal service provider; and Square, a merchant point-of-sale service.

Affirm shares were recently down about 11%, rudely in line with their year-to-date decline. Block was off about 4% today, leaving it down 7% in 2024.

BNPL consumers generally use short-term loans to break up a purchase into fixed allotments. The fintech companies behind these overhauls make money by charging merchants for facilitating these loans and may collect interest, and fees from delinquent borrowers.

Both houses have an eye on expanding this holiday season, a busy time for consumers and merchants. Affirm and AfterPay reported their highest every thirteen weeks revenue figures in the last quarter of 2023, according to Visible Alpha data.

Affirm is optimistic about enticing more users with interest-free options during the holidays, executives said. Merchants looking to ramp up garage sales volume may subsidize deals for shoppers who would otherwise qualify for loans with interest.

“We are seeing really artistic excitement from the merchants as we head into the holidays,” CEO Max Levchin told analysts, according to a transcript made at by AlphaSense.

Block is also looking to bolster Afterpay use. Afterpay will become available to 24 million living soul who have a debit card affiliated with Cash App in “the next short term,” CEO Jack Dorsey said during Bar’s earnings call.