Affirm (AFRM) Partners With Zenni Optical, Stock Jumps 12.4%
Affirm Holdings, Inc. AFRM has entered into a strategic partnership with online eyewear retailer Zenni Optical. This collaboration aims to provide Zenni Optical customers with flexible payment options. Approved customers will have the opportunity to divide the total cost of their purchase into manageable monthly payments. This buy now, pay later (BNPL) option will be applicable to purchases exceeding $75.
AFRM shares surged 12.4% yesterday, propelled by multiple positive factors. The Zenni Optical partnership followed closely after the collaboration with Blackhawk Network. Additionally, the Federal Reserve's indication of a potential rate cut in 2024, while maintaining the current rate amid diminishing inflation intensity, contributed to the positive sentiment. The macroeconomic environment, as reported by The Wall Street Journal, instilled optimism for companies like AFRM, as the prospect of normalized borrowing costs emerged in the near future.
Now, getting back to Affirm's latest deal, this initiative is anticipated to enhance the customer experience for Zenni Optical by offering transparent terms without hidden fees or compounding interest. Notably, on Black Friday, customers utilizing Affirm for payments spent nearly $260 on average per checkout on eyewear, marking a significant year-over-year increase of over 30%.
The collaboration integrates San Francisco Bay Area-based Zenni Optical into Affirm's extensive network of 266,000 retail partners. This strategic partnership is poised to enhance Zenni Optical's sales, average order value and repurchase rates. Affirm, already well-established in the U.S. market, will further strengthen its presence in the North American market with this latest alliance.
The deal is expected to contribute to an increase in Affirm's merchandise volume. While consumer reliance on BNPL solutions and comparable services grew amid high inflation, the normalizing rates in the future will lower borrowing costs for consumers, which can lead to further growth in transactions and usage of AFRM’s services.
Price Performance
Over the past year, shares of Affirm have surged 292.9% compared with the 12.7% rise of the industry it belongs to.
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Zacks Rank & Other Key Picks
Affirm currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Business Services space are FirstCash Holdings, Inc. FCFS, Shift4 Payments, Inc. FOUR and RB Global, Inc. RBA. While FirstCash and Shift4 Payments currently sport a Zacks Rank #1 (Strong Buy) each, RB Global carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FirstCash’s current year bottom line indicates 13.1% year-over-year growth. Headquartered in Fort Worth, TX, FCFS beat earnings estimates in all the past four quarters, with an average surprise of 7.9%.
The Zacks Consensus Estimate for Shift4 Payments’ current year earnings is pegged at $2.92 per share, which indicates 110.1% year-over-year growth. Allentown, PA-based FOUR beat earnings estimates in all the past four quarters, with an average surprise of 25%.
The Zacks Consensus Estimate for RB Global’s current year bottom line suggests 12.5% year-over-year growth. Based in Westchester, IL, RBA beat earnings estimates in each of the past four quarters, with an average surprise of 18.9%.
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