Affirm extends rally on Cyber Monday boost as BNPL lending surges.
👉 Shares of "buy now, pay later" provider $AFRM (Affirm) extended a rally following a rating upgrade and data showing that more price-conscious shoppers turned to BNPL services to fund Cyber Monday purchases.
👉 Record sales of $12.4 billion on one of the country's busiest shopping days have highlighted the growing role of BNPL providers like Affirm, as well as rivals $PYPL (PayPal Holdings) , Afterpay, Klarna and Zip, in driving online retail shopping.
👉 U.S. BNPL use hit an all-time high on Cyber Monday, contributing $940 million in online spending, up 42.5% from a year earlier, Adobe Analytics data showed. The number of items per order rose by 11%, according to Adobe, as shoppers used BNPL for increasingly larger carts.
👉 BNPL providers partner with online merchants such as $AMZN (Amazon.com Inc), $TGT (Target Corp) and $WMT (Walmart Inc.) to extend loans to customers to cover purchases, which they pay back in installments. Their loans typically charge zero interest, helping to increase dramatically the affordability of online goods, particularly for shoppers who have lower credit scores.
👉 Affirm's stock price has more than tripled this year, buoyed by increased demand for its services from customers faced with higher interest rates and red-hot inflation, as well as an extended partnership with Amazon's business-to-business store.
👉 Affirm raises funding from banks, insurance firms and the capital markets to front up loans, and earns a commission from merchants - which can sometimes be as high as 12.5%. While BNPL providers' most popular four-installment products are typically interest-free, some charge interest on other purchases. Affirm does not charge late fees, but other providers do.
👉 Affirm offloads some of its loans to investors via sales of asset-backed securities. Some other BNPL providers - including Sweden's Klarna, which recently turned profitable- are able to partly fund loans through their deposit-taking banking arms or robust payments business.
Read more ❓ www.reuters.com/markets/us/bnpl-provider-affirm-set-extend-rally-upgrade-cyber-monday-boost-2023-11-28/
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