⏰ IPO Alert - Affirm boosts its IPO price by 40%

Consumer-lending unicorn Affirm has finally priced its shares at $49 and plans to raise $1.2B in today’s IPO

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Yesterday’s Close) 3,801.19 +1.58 (0.042%)

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USDINR (5 PM IST) 73.48 (1 Year +3.51%)

Affirming The Animal Spirits?

Consumer-lending unicorn Affirm has finally priced its shares at $49 and plans to raise $1.2B in today’s IPO.

Background: Affirm Holdings, founded in 2012, helps buyers get easy consumer loans for purchases at any retailer. Affirm helps people without credit history or savings account to get the things they want without spiraling into unhealthy debt. Founded by PayPal co-founder Max Levchin, the company has thus far partnered with 6500+ merchants and platforms including players such as Zen-Cart, BigCommerce, Shopify, Peloton, and Walmart.

The company currently caters to 6.2M+ consumers and has processed around $10.7B of gross merchandise volume (GMV) since 2016. Its merchant retention rate is over 100%. While Levchin is the largest shareholder, other investors include a GIC affiliate (Singapore’s sovereign wealth fund), Founders Fund, Khosla Ventures, and Shopify Inc.

What is Happening? For the third quarter, Affirm posted revenue of $174M and a net loss of $15M, a vast improvement over the prior-year period when it had revenue of $88M and loss of $31M. In all of the last fiscal year, the company had generated revenue of $509.5M.

Affirm’s most important merchant partner in Q3 was Peloton Interactive Inc., which was alone responsible for 30% of the revenue in the quarter. The top 10 merchants contributed to 37% of total revenue in Q3, underscoring the company’s dependence on a handful of partners.

Affirm had initially priced the IPO in the $33 to $38 range. Then it bumped the price to $41 to $44. It finally zeroed in at $49 per share. With the 24.6M shares on offer, the company is valued at $15B on a fully-diluted basis. At this price, the company is worth ~2.5X its valuation in September 2020, when it raised a private round at $19.93 per share. The IPO is being led by Morgan Stanley, Goldman Sachs, and Allen & Co.

Market Reaction: AFRM shares will list today on NASDAQ and will be available for our clients shortly thereafter.

Company Snapshot 📈

AFRM Expected IPO Price $49

Newsworthy 📰

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Later Today 🕒

  • 7.00 PM IST: Consumer price index
  • 7.00 PM IST: Core CPI
  • Eagle Bancorp Inc Earnings (EGBL)
  • Before Market Open: SINA Corp Earnings (SINA)

Fun Fact of The Day 🌞

Nearly 74% of the atoms in the Milky Way galaxy are hydrogen atoms.

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