Affirm Holdings, Inc. Shows Surge in Stock Value Amid Volatility, 2 months ago

Affirm Holdings Technical Analysis

Affirm Holdings, Inc. (Ticker: AFRM) showcased a significant surge in its stock value with a 15.47% jump on December 19, 2023, closing the day at $50.46. This surge brought the stock to its 52-week high of $51.56. The technical indicators reveal a strong upward momentum. With an RSI14 at 83, it substantially exceeded the threshold of 70, indicating an overbought condition which could suggest that the stock may see a retraction in the short term as some investors take profits. Nonetheless, the overbought condition could persist amid strong buying pressure.

The MACD, standing at 6.87, further indicates bullish momentum in the recent months. The stock is trading well above both the 50-day and 200-day moving averages, showcasing strong upward price movement in the past weeks.

However, it’s imperative to consider the high Average True Range (ATR) of 6.64, which signals high volatility. Investors might expect wide price swings in the upcoming sessions. The volume on December 19 was significantly higher than the average volume, pointing to heightened investor interest following recent news.

Fundamental Analysis

Affirm has an aggressive market cap of approximately $15.23 billion, reflecting significant investor confidence. Despite high investor enthusiasm, Affirm's fundamental analysis reveals some concerns. The company's EPS of -$3.05 and a negative PE ratio of -16.54 suggest that the company is not currently profitable, a potential red flag for value-centric investors.

The news on December 19 indicated that Affirm expanded its partnership with Walmart, enabling its "buy now, pay later" services at the retail giant's self-checkout kiosks, which likely contributed to the stock's rally. This expansion could result in increased transaction volumes and drive future growth.

Affirm Holdings Analyst ratings show a consensus of "Buy" with 6 buys, 5 holds, and 3 sell ratings. Despite the mixed sentiment, the dominant positive ratings reflect optimism about Affirm's future outlook.

Stock Performance Predictions

For the next trading day on December 20, 2023, given the overbought technicals but positive sentiment and recent sharp rise due to specific catalysts, the stock may face a minor pullback as traders lock in profits from the recent spike. Nevertheless, the excitement around the Walmart news could sustain buying pressure.

Looking ahead to the upcoming week, the stock may continue to exhibit high volatility. With no immediate resistance level in sight, it may attempt to test new highs if the broader market sentiment remains buoyant and if additional positive company-specific news arises.

Overall Evaluation

Considering a convergence of both technical and fundamental elements, the recommendation for Affirm Holdings, Inc. is to Hold. The technical indicators suggest a need for caution given the overbought condition, yet strong momentum and recent positive catalysts through its expanded partnership with Walmart support the arguments for potential growth.

Investors should watch for potential profit-taking in the near term but also be aware that the company has demonstrated strategic improvements that could bolster its position long-term. The high volatility also calls for a cautious approach, advising against making immediate, sizeable new investments until the stock stabilizes.

Therefore, the current Hold recommendation stems from anticipating near-term price consolidation and recognizing the underlying potential in Affirm's business model and market position, albeit coupled with consideration of the company’s present lack of profitability. Investors already holding the stock may consider riding the momentum while maintaining a vigilant eye on the market’s reception to upcoming financial results and strategic moves.

Check full Affirm Holdings forecast and analysis here.