SAN FRANCISCO – Affirm Holdings Inc. (NASDAQ:AFRM), a leader in the personal credit sector, has amended its revolving credit agreement, increasing its borrowing capacity and extending the agreement's maturity date. The changes, reported in a recent 8-K filing with the Securities and Exchange Commission, reflect the company's proactive financial management and commitment to long-term growth.
On June 26, 2024, Affirm Holdings and its subsidiary, Affirm, Inc., revised the credit agreement with a group of lenders led by Barclays (LON:BARC) Bank PLC. The amendment increases the total credit commitment from $205 million to $330 million and extends the maturity date from 2024 to June 26, 2027. However, the agreement includes a condition that could accelerate the maturity date if certain conditions related to the company's outstanding convertible notes are not met.
The newly secured funds are earmarked for general corporate purposes and will support Affirm's business operations. The credit facility is unsecured, with interest rates based on SOFR plus a margin or a base rate plus a margin, and includes a commitment fee on unused funds.
The revised agreement also imposes financial covenants and operational restrictions on Affirm Holdings and its subsidiaries. These include limitations on incurring additional debt, creating liens, paying dividends, and entering into certain affiliate transactions.
In a separate event, Affirm Holdings disclosed a cybersecurity incident at Evolve Bank & Trust, a partner bank responsible for issuing the Affirm Card. The breach, which occurred on June 25, 2024, resulted in unauthorized access to personal and financial information of Affirm Card users. Affirm Holdings has clarified that its own systems were not compromised, and card usage remains unaffected. The company is conducting an independent investigation and has notified affected users and law enforcement.
Despite the security breach, Affirm Holdings does not anticipate a material impact on its financial condition or operations. The company has increased its fraud monitoring measures to safeguard its customers and maintain the integrity of its services.
In other recent news, Affirm Holdings has been the subject of various analyst reviews, regulatory updates, and financial developments. JMP Securities initiated coverage on Affirm with a Market Perform rating, acknowledging the company's significant role in the Buy Now Pay Later (BNPL) sector. Goldman Sachs (NYSE:GS), on the other hand, upgraded Affirm to a 'buy' rating, citing the company's effective credit management and competitive edge in underwriting.
CFRA maintained a 'sell' rating on Affirm, projecting future revenue forecasts for the fiscal years 2024 to 2026 at $2.3 billion, $2.7 billion, and $3.2 billion respectively. BTIG initiated coverage on Affirm with a neutral rating, predicting the company's Gross Merchandise Volume (GMV) to grow at a rate of 25-35% year-over-year. However, the firm cautioned that market expectations and potential higher delinquencies or losses could pose challenges to Affirm's stock performance.
RBC Capital maintained its 'Sector Perform' rating on Affirm, but lowered its downside valuation for the company to $25, reflecting the current market dynamics. Amid these analyst notes, Affirm has also been active in the securitization market, issuing $8 billion in securitizations as part of its strategy to diversify its financial activities and revenue sources.
Finally, the U.S. Consumer Financial Protection Bureau (CFPB) extended certain consumer protection rules typically applied to credit cards to the BNPL industry, impacting companies like Affirm. These developments underline the evolving financial landscape within which Affirm operates.
InvestingPro Insights
In light of Affirm Holdings Inc.'s recent financial maneuvers and the cybersecurity incident, it's crucial for investors to consider real-time data and expert analysis. According to InvestingPro data, Affirm's market capitalization stands at a robust $9.24 billion, reflecting significant investor confidence despite recent challenges. The company's revenue growth is impressive, with a 40.05% increase over the last twelve months as of Q1 2023, and an even higher quarterly surge of 51.23%. However, it's worth noting that the firm's P/E ratio is currently negative at -13.48, indicating that it's not profitable as of the last twelve months.
InvestingPro Tips suggest that while three analysts have recently revised their earnings upwards for the upcoming period, highlighting potential optimism, the stock has experienced significant price volatility. Over the last week, the stock has taken a notable hit, and this volatility is expected to continue. Moreover, analysts do not anticipate the company will be profitable this year. Despite these concerns, Affirm's liquid assets exceed its short-term obligations, which may provide some financial stability.
For those looking to delve deeper into Affirm's financial health and stock performance, there are additional InvestingPro Tips available. Investors can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further insights that could guide investment decisions. With Affirm's next earnings date set for August 22, 2024, staying informed with the latest data and expert analysis will be key for stakeholders.
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