UPDATE: January 19, 2021: Affirm last week announced the pricing of its initial public offering stock price at $49 per share, which was higher than its expected range of $41 to $44. Shares of Affirm opened at $90.90 on Wednesday, and the company raised at least $1.2 billion via the offering, according to MarketWatch, which was expected by Affirm.
Buy now, pay later startup Affirm on Monday raised its price target to between $41 and $44 per share, up from its range of $33 to $38 a week ago, according to filings with the Securities and Exchange Commission. The fintech company's initial public offer could happen sometime this week, according to analyst notes and media reports.
At the high end, the proposed aggregate price would exceed $1.2 billion. The company's valuation, even using the earlier, lower range, implies a market cap between $9.3 billion and $10.8 billion, according to a Jan. 6 note from MKM Partners.
Affirm, which has raised more than $1.3 billion from investors so far, was most recently valued at more than $4 billion after raising $500 million in venture capital in September, MKM also said. PitchBook research showed Affirm valued at $2.9 billion in 2019.
Buy now, pay later firms have benefited from the economic uncertainty experienced by consumers of all income levels during the pandemic.
Younger consumers are gravitating to the flexible payment option in high numbers, according to research from consumer spending data firm Cardify.ai, Among 6,500 consumers surveyed across the U.S. late last year, 44% said the payment method is "somewhat or very important" in determining how much they would spend during the holiday, with a slim majority "somewhat or very concerned" that it could lead them to spend more than they should.
That research also suggests that the option is spurring sales, as Affirm says it does, considering Cardify.ai's finding that nearly half (48%) say it allows them to spend at least 10% to 20% more than they would with a credit card. That's sending several retailers flocking to these firms. Macy's invested in and partnered with buy now, pay later company Klarna ahead of the holidays last year, for example. Shopify, Gucci, Bonobos, The RealReal and Peloton are among Affirm's partners, according to its prospectus.
The number of such companies has also risen. Rival AfterPay "is far and away the most popular BNPL platform among respondents, with Affirm a distant second and Klarna in third," Cardify.ai said.
Affirm has an annual gross merchandise value of $4.6 billion, with 6,500 merchant partners and 3.6 million active consumers, according to its filing Monday.