Affirm Stock Tanks! Is Max Levchin Playing 4D Chess or Just Badly Geared?

The Great Dip of '24: Not the Kind You Eat With Chips

Alright alright alright... settle down chat. You see this? Affirm the 'buy now pay later' company their stock is taking a nosedive faster than I do when I see a new World of Warcraft expansion announcement. Friday was brutal. The numbers? Not looking so good folks. They're projecting revenue between $815 million and $845 million and Wall Street was expecting more like $841 million. That's like ordering a large pizza and only getting a medium. It's just... disappointing.

Zero Percent? More Like Zero Sense?

Now here's where it gets interesting. Max Levchin the big cheese at Affirm is pushing this 'zero percent loan' strategy HARD. His reasoning? Get people hooked turn them into loyal customers. He even went on CNBC's 'Squawk Box' and said it's all about building customer loyalty even if it means taking a hit on the margins. Okay Max I get it. But is it REALLY worth sacrificing short term gains for long term maybe's? Seems kinda sus to me chat. Just saying. Are they so desperate they are gonna go full Jebait?

Taking Share From Credit Cards? Or Digging Their Own Grave?

Levchin claims they're 'taking share from credit cards.' They are delusional if you ask me. The chat knows it! These zero percent loans make up 13% of their business and apparently 80% of those are going to people with good credit. So are they really attracting new customers or just giving free money to people who already have money? I'm not an expert but something smells fishy here. It sounds to me like the people most able to buy stuff without their service are using their service.

Beating Earnings But Missing the Mark

Okay so they beat on earnings and revenue was 'inline' with expectations. Sounds good right? WRONG! Their revenue less transaction costs the RLTC was a total miss. All because of those sweet sweet zero percent loans. It's like winning the battle but losing the war. They are too focused on the things that do not matter just like Blizzard! Do you guys not get it?

Diamond Hands or Paper Hands? The Analysts Weigh In

Despite the dumpster fire some analysts are still huffing that hopium. Susquehanna Bank of America and TD Cowen all upgraded the stock or raised price targets. They see potential! Goldman Sachs even called them a 'strong category leader.' Meanwhile Barclays is being a bit more realistic warning of short term underperformance but still liking the long term potential especially with that Costco partnership. Costco is the only thing keeping this afloat. It's still a clown fiesta.

The Long Game: Are We Even Playing the Same Game?

Levchin is all about the 'long game.' He says it took a decade for people to understand what Affirm is doing. But here's the thing Max: sometimes the long game ends before you even get to the mid game! Are they adapting are they overcoming? Or are they just gonna keep malding about the problems and ignore the chat? I don't know. But as for me? I'm gonna grab another Dr. Pepper and watch this train wreck unfold. For the content of course!