Shares of Affirm Holdings, Inc. (NASDAQ:AFRM) fell 1.3% on August 18 as Klarna plunged more than 22% after reducing its 2026 volume and revenue forecasts. Klarna now expects full-year gross merchandise volume of $149 billion-$151 billion, down from more than $155 billion, and revenue of $4.08 billion-$4.16 billion, down from $4.34 billion. Yet the warning was not cleanly industrywide. Klarna’s second-quarter revenue increased 27%, overall volume rose 18%, and U.S. volume grew 27%. Management tied the weaker outlook primarily to soft German retail conditions, while currency translation reduced projected volume by approximately $600 million. Affirm shares rebounded 5.1% the next session. For Affirm Holdings, Inc. (NASDAQ:AFRM), the August 27 earnings report must show whether the initial decline reflected a broader consumer-credit warning or an opportunity to capture share from a slowing competitor.
Affirm Holdings, Inc. (NASDAQ:AFRM) enters the report with stronger momentum than Klarna’s guidance might suggest. Fiscal third-quarter gross merchandise volume increased 35% to $11.6 billion, while revenue rose 33% to $1.04 billion. Active consumers grew 22% to 26.8 million, and active merchants increased 44% to 515,000.
Bull Case: Card Growth Is Expanding Affirm’s Reach
The strongest argument for Affirm Holdings, Inc. (NASDAQ:AFRM) is that its growth is spreading beyond the online checkout button. Affirm Card volume jumped 146% to $2.1 billion, while active cardholders more than doubled to 4.4 million. Direct-to-consumer volume increased 48%, and wallet and software partnerships helped expand the merchant network.
Affirm Holdings, Inc. (NASDAQ:AFRM) also has substantial funding capacity to support further share gains. Capacity reached $28.2 billion in March, up from $23.3 billion a year earlier, while the average annualized cost of funds declined 126 basis points to 5.8%. The company estimated that its funding arrangements could support more than $65 billion of annual volume. If Klarna prioritizes profitability over aggressive near-term growth, as some analysts inferred, the slower volume outlook could create room for Affirm without requiring the company to strain its balance sheet.
Bear Case: Credit Trends Still Matter More Than Market Share
Affirm Holdings, Inc. (NASDAQ:AFRM) remains exposed to the same consumer and financing pressures affecting the broader BNPL category. The 30-plus-day delinquency rate on monthly installment loans, excluding Peloton and Pay in X, increased 29 basis points year over year to 2.8%. The allowance for credit losses rose to 6.0% of loans held for investment from 5.7% a year earlier.
