QS Research · Michael Burry's Scion Capital analyst template · 2006
Affirm Holdings, Inc. (AFRM)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $65.95 (close 2026-11-10)
Conclusion: WATCH
Conviction low · base case +150% · downside -71% · upside +169%
The market is not missing the growth — it is paying 11.5x stated earnings for a lender whose stated net income is $2.01B against $614.8M pre-tax and $540.4M operating income, so the cheap P/E is an accounting artifact until the $1.40B bridge is explained. Operating momentum is real: Q1 FY2027 GMV rose 34% to $14.4B, revenue rose 35% to $1.262B and operating income rose 194% to $187.1M, and the 2026-11-05 FY2027 GMV guide above $65.25B plus the 2026-11-06 AI-underwriting target supports a re-rate toward the 28.8x peer median that is the code's $165.16 base. But credit provisions rose 59.4% and the cited FY expectation is a 65.82% earnings decline, so the downside is severe; with a crowded short (6.2 days to cover) and no open-market insider buys, this is a watch, not a long.
Key numbers
- Share price: $65.95
- Market cap: $23.20B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $4.59B
- P/E (TTM): 11.5x
- Price / book: 4.03x
- Earnings-quality flags (TTM): none flagged
- Revenue growth (latest fiscal year): +29.6%
The 15 boxes
- ✓ 1. Long-form business notes
Affirm's FY2026 10-K describes a transaction-level underwriting and payments platform that earns merchant fees, interest on interest-bearing installment loans, and card interchange, with $0 late fees since founding. Scale is much larger than FY2021: GMV $8.3B FY2021 vs $50.2B FY2026, merchants ~29,000 as of June 30, 2021 vs ~571 thousand as of June 30, 2026, and FY2026 product mix was 70% interest-bearing, 16% Pay-in-X and 14% 0% APR. S24 reports Revenue $429.4M FY2021 and $1.44B FY2026, with TTM to 2026-09-30 Revenue $4.59B; FY2026 Net income $1.93B is far above Pre-tax income $492.7M, so the net income line is not a clean operating earnings measure.
- ✓ 2. Competitive advantage
The filings describe a crowded, low-barrier market and no clearly durable moat: the competition is legacy card issuers funded by low-cost insured deposits plus PayPal, Block, Klarna and merchants' own pay-over-time options, and Affirm's own merchant and bank-partner agreements are non-exclusive with no volume commitments. What it does have is rising repeat use (7.0 transactions per active consumer at June 30, 2026, +20% y/y, +44% over two years) and its first positive operating year, $417.0M in FY2026 and $540.4M TTM to 2026-09-30, after five straight loss years. FY2026 net income of $1.93B is not proof of that: it exceeds pre-tax income of $492.7M, so a large benefit sat below the operating line. The 10-K asserts 'competitive advantages' but the sources never name or quantify them.
- ✓ 3. 10-Q takeaways
Q1 FY2027 (three months ended Sep 30, 2026) showed GMV +34% to $14.4B, revenue +35% to $1.262B, operating income +194% to $187.1M, and net income +103% to $164.2M; S31 puts operating income at 15% of revenue and RLTC at 4.30% of GMV. Credit costs rose faster than revenue: provision +59% to $259.4M and allowance/loans 6.3%, while funding costs +22%. The 10-Q risk-factor section says no material changes from the FY2026 10-K, but the computed 10-K diff shows 32 new/rewritten risk paragraphs; no numeric FY2027 guidance, cash balance or buyback amount appears in the excerpted sources.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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