(Bloomberg) — Affirm Holdings Inc. investors faced a rocky ride this week, with shares first buffeted by a rival’s deal to do business with Walmart Inc. customers and then lifted by optimism about the state of the US economy.
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Stock in the company that provides buy-now-pay-later financing to shoppers slid Monday and Tuesday to a more than four-month low after Klarna Group Plc said it was partnering with a Walmart-backed finance app to offer a similar service to the retail giant’s US customers.
As it became clear the deal wasn’t a disaster for Affirm, itself a Walmart partner, the stock staged a rebound — one that got a boost on the back of Wednesday’s Federal Reserve commentary calming jitters about US President Donald Trump’s tariffs. After a third straight session of gains on Friday, shares nearly made up their earlier losses, closing down just 0.4% on the week.
The stock is no stranger to volatility. It hit a multi-year high last month after quarterly results beat expectations. But as fears mounted about the impact of tariffs on the US economy, shares of the firm whose business model is tied to the strength of consumer credit plunged 38% through last week.
“When investors go from risk on to risk off — which they did here, like flipping a light switch — any bad news is really bad news,” William Blair analyst Andrew Jeffrey said. “Conversely, on the way up when it’s risk on, any good news is really good news.”
The bad news came first this week with the Klarna deal announcement. Even Affirm’s regulatory filing Monday stating it still had its own partnership with Walmart and that the program accounted for only about 2% of its adjusted operating income in the second half of last year, failed to shore up the stock, which fell 13% in the two days through Tuesday.
The tide turned mid-week with dip buyers surfacing as analysts called the selloff overdone and Chair Jerome Powell calmed tariff-obsessed investors, signaling the Fed saw no need for drastic action in the face of Trump’s trade war.
“The kneejerk reaction was clearly overblown, so it took time for investors to get educated about the actual impact,” Mizuho analyst Dan Dolev said in an email.
As the dust settles on a volatile week, William Blair’s Jeffrey, who rates the shares outperform, has his eye on the consumer credit market. If it deteriorates, it’ll hit the company’s growth prospects, he said, noting even rate cuts could be a bad sign if they come because there’s mounting evidence of a recession.
