Wait For A Dip To Buy Affirm Stock?

September 2nd, 2025 by Trefis Team
AFRM: Affirm logo
AFRM
Affirm

After a strong 40% year-to-date surge, including a recent boost from a positive earnings report, investors might be wondering if Affirm Holdings stock (NASDAQ: AFRM), a financial technology company that offers services, such as buy now, pay later, and point-of-sale payment solutions, is still a good buy. At its current price of around $90, the stock appears to be relatively expensive, making it a pricey option for new investors.

While there are minimal concerns about the company’s long-term health, its current valuation seems very high. Our conclusion is based on an analysis of Affirm’s recent operating performance, current financial condition, and historical trends. We assessed the company using key metrics like Growth, Profitability, Financial Stability, and Downturn Resilience. This analysis shows that Affirm has a strong operational and financial foundation, as detailed in the following sections.

That being said, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 91% since its inception. Separately, see – SoundHound AI: After 6x Gains, What’s Next For SOUN Stock?

How Does Affirm’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, AFRM stock looks very expensive compared to the broader market.

  • Affirm has a price-to-sales (P/S) ratio of 9.0 vs. a figure of 3.3 for the S&P 500
  • Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 48.1 compared to 21.4 for S&P 500

How Have Affirm’s Revenues Grown Over Recent Years?

Affirm’s Revenues have grown considerably over recent years.

  • Affirm has seen its top line grow at an average rate of 34.3% over the last 3 years (vs. increase of 5.3% for S&P 500)
  • Its revenues have grown 38.8% from $2.3 Bil to $3.2 Bil in the last 12 months (vs. growth of 5.1% for S&P 500)
  • Also, its quarterly revenues grew 33.0% to $876 Mil in the most recent quarter from $659 Mil a year ago (vs. 6.1% improvement for S&P 500)

How Profitable Is Affirm?

Affirm’s profit margins are around the median level for companies in the Trefis coverage universe.

  • Affirm’s Operating Income over the last four quarters was $338 Mil, which represents a moderate Operating Margin of 10.5% (vs. 18.6% for S&P 500)
  • Affirm’s Operating Cash Flow (OCF) over this period was $794 Mil, pointing to a high OCF Margin of 24.6% (vs. 20.2% for S&P 500)
  • For the last four-quarter period, Affirm’s Net Income was $52 Mil – indicating a very poor Net Income Margin of 1.6% (vs. 12.7% for S&P 500)

Does Affirm Look Financially Stable?

Affirm’s balance sheet looks strong.

  • Affirm’s Debt figure was $7.9 Bil at the end of the most recent quarter, while its market capitalization is $29 Bil (as of 9/1/2025). This implies a strong Debt-to-Equity Ratio of 27.1% (vs. 20.3% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
  • Cash (including cash equivalents) makes up $2.2 Bil of the $11 Bil in Total Assets for Affirm.  This yields a strong Cash-to-Assets Ratio of 20.0% (vs. 7.2% for S&P 500)

How Resilient Is AFRM Stock During A Downturn?

AFRM stock has fared much worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on AFRM stock? Our dashboard – AFRM Climbed 11% In A Day. How Confident Are You In The Stock? – has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

  • AFRM stock fell 94.7% from a high of $168.52 on 4 November 2021 to $8.91 on 27 December 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
  • The stock is yet to recover to its pre-Crisis high
  • The highest the stock has reached since then is 88.46 on 1 September 2025

Putting All The Pieces Together: What It Means For AFRM Stock

In summary, Affirm’s performance across the parameters detailed above are as follows:

  • Growth: Very Strong
  • Profitability: Moderate
  • Financial Stability: Strong
  • Downturn Resilience: Weak
  • Overall: Strong

While Affirm has shown strong performance in the key areas we’ve analyzed, its current valuation of 9.4 times trailing revenue is slightly higher than its three-year average price-to-sales ratio of 8.9. This high valuation, combined with the stock’s recent price surge, suggests that there may be limited upside potential for AFRM in the near term.

Of course, we could be wrong in our assessment. A potential interest rate cut later this month could boost Affirm’s lending business and lead some investors to believe the stock is worth an even higher multiple. Despite this possibility, we believe the current valuation already accounts for these potential positives. The stock’s history of significant declines during economic downturns also introduces an added element of risk.

Now, we apply a risk assessment framework while constructing Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

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