Affirm shares are now down 42%: buy the dip or sell the rip?

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Shares of Affirm Holdings Inc (NASDAQ: AFRM) have tanked over 40% in less than 48 hours on disappointing guidance for Q3 revenue. The massive sell-off, as per Dan Dolev, is an opportunity to set foot in a quality stock at a deep discount.  

Dolev’s bull case for Affirm Holdings

Affirm’s dovish outlook for third-quarter revenue raised questions on its BNPL partnership with Amazon.com Inc, but the senior research analyst at Mizuho defended his bullish call on CNBC’s “The Exchange” and said:

Affirm is a category leader in a disruptive market. They’re creating an alternative to credit. There’s growing demand. Millions of dollars of volume on Amazon within a month. Being a category leader in a fast-growing secular trend is more powerful than the stock is reflecting today.

Dolev has a buy rating on AFRM with a price target of $100 a share that represents a more than 100% upside from here.

What about the charge-offs though?

Dolev agrees that charge-offs might lead to more regulatory scrutiny in this space but doesn’t see it much of a threat for Affirm Holdings. He added:

There are delinquencies but they are starting to go back down. It’s below 2019 levels. So, I would take their word for it that they can control it. If they see it’s becoming too big of a problem, they’d restrain the supply and the charge-offs will come under control. So, people are panicking too much.

Apart from Affirm, Dolev sees Fidelity National Information Services Inc in financials as a stock that’s well-positioned for the upcoming rising rate environment. Goldman Sachs expects the U.S. Federal Reserve to hike rates up to seven times this year.  

The post Affirm shares are now down 42%: buy the dip or sell the rip? appeared first on Invezz.

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