Affirm Holdings Inc (NASDAQ:AFRM) shares are down on Tuesday as investors react to President Donald Trump’s proposal regarding credit card interest rates. Here’s what investors need to know.
Credit Card Rate Cap: A Game Changer?
Trump warned credit card issuers that they must lower interest rates to 10% by Jan. 20 or face severe consequences, labeling current rates of 20% to 30% as abusive.
This aggressive stance has initially pushed shares of alternative consumer credit companies like Affirm higher, but the stock has since given back those gains as the market digests the implications of such a policy shift.
The potential for a 10% cap on credit card rates could significantly impact traditional credit issuers, forcing them to alter their business models. Affirm, which operates on a buy now, pay later model with fixed payment schedules, may benefit from a shift away from revolving credit, positioning itself as a more consumer-friendly alternative.
The stock’s decline on Tuesday comes as the broader market is experiencing mixed performance, with the Nasdaq-100 down 0.38% and the S&P 500 also falling by 0.38%.
Technical Indicators Point To Stable Trend With Mixed Momentum
The stock is currently trading 0.2% above its 20-day simple moving average (SMA) and 0.3% above its 100-day SMA, indicating a relatively stable short-term trend.
Over the past 12 months, shares have increased by 38.89% and are currently positioned closer to their 52-week highs than lows, reflecting overall strength in the longer-term trend.
The RSI is at 51.09, which is considered neutral territory, suggesting that the stock is neither overbought nor oversold. Meanwhile, MACD is above its signal line, indicating bullish momentum in the stock.
The combination of neutral RSI and bullish MACD suggests mixed momentum.
- Key Resistance: $79
- Key Support: $65.50
Earnings Surge Ahead: Analyst Predictions Reveal Potential
Investors are looking ahead to the next earnings report on Feb. 5.
- EPS Estimate: 61 cents (Up from 23 cents year-over-year)
- Revenue Estimate: $1.06 billion (Up from $866.38 million YoY)
- Valuation: P/E of 110.7x (Indicates premium valuation)
Analyst Consensus & Recent Actions: The stock carries a Buy Rating with a consensus price target of $84.56. Recent analyst moves include:
- TD Cowen: Buy (Lowered Target to $110)
- Wolfe Research: Initiated with Peer Perform
- Freedom Capital Markets: Initiated with Buy (Target $90)
Valuation Insight: While the stock trades at a premium P/E multiple, the strong consensus and 165% expected earnings growth suggest analysts view this growth as justification for the 14% upside to analyst targets.
Benzinga Edge Rankings
Below is the Benzinga Edge scorecard for Affirm, highlighting its strengths and weaknesses compared to the broader market:
- Momentum: Bullish (Score: 80.48/100) — Stock is outperforming the broader market.
- Growth: Strong (Score: 98.34/100) — Indicates exceptional growth potential.
- Value: Risk (Score: 17/100) — Trading at a steep premium relative to peers.
The Verdict: Affirm’s Benzinga Edge signal reveals a classic “High-Flyer” setup. While the Momentum (80) and Growth (98) scores confirm the strong trend, the low Value (17) score warns that the stock is priced for perfection — investors should ride the trend but use tight stop-losses.
Top ETF Exposure
- ERShares Private-Public Crossover ETF (NASDAQ:XOVR): 3.48% Weight
- Global X FinTech ETF (NASDAQ:FINX): 4.11% Weight
- Amplify Digital Payments ETF (NYSE:IPAY): 4.54% Weight
Significance: Because Affirm carries significant weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Price Action
AFRM Price Action: Affirm Holdings shares were down 0.42% at $76.07 at the time of publication on Tuesday, according to Benzinga Pro data.
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