Investment IdeasMy Portfolio
All Investment Ideas
$264M$510M

IPO Affirm

Financial lender of installment loans
IPO
Medium risk

Revenues in 2019-2020

Invest in IPO Affirm

This investment idea is no longer available. New applications are not accepted

View more ideas
Investment Idea Details
The Company

Affirm provides consumers with a simpler, more transparent, and flexible alternative to traditional payment options. Through their technology-driven payments network and partnership with an originating bank, Affirm enables consumers to confidently pay for a purchase over time, with terms ranging from one to forty-eight months. When a consumer applies for a loan through Affirm platform, the loan is underwritten using company’s proprietary risk model. Once approved and the consumer selects their preferred repayment option, the majority of loans are funded and issued by the originating bank partner. Affirm was founded by PayPal and Yelp founder Max Levchin in 2012 in San Francisco, California.

Merchants partner with Affirm to transform the consumer shopping experience and to acquire and convert customers more effectively through frictionless point-of-sale payment solution. Consumers get the flexibility to buy now and make simple monthly payments for their purchases and merchants see increased average order value, repeat purchase rate, and an overall more satisfied customer base. Unlike legacy payment options and competitors’ product offerings, which charge deferred or compounding interest and unexpected costs, Affirm discloses up-front to consumers exactly what they will owe — no hidden fees, no penalties. More than 6.2 million consumers have completed approximately 17.3 million transactions with over 6,500 merchants on Affirm platform, leading to a total Gross Merchandise Volume, net of refunds (“GMV”) of approximately $10.7 billion transacted through the platform since 2016.

Market Opportunity

According to eMarketer, global online sales grew 20% to approximately $3.4 trillion in 2019 and are expected to grow to approximately $5.8 trillion by 2023; however, e-commerce still only accounts for 14% of total retail sales. Every element of commerce is moving online, from storefronts, to order fulfilment, to payment and checkout experiences. Gen Z and Millennials are early and frequent adopters of e-commerce and tend to prefer the ease, flexibility, and greater selection offered by shopping online.

Consumers increasingly prefer more flexible and innovative digital payment solutions over traditional credit payment options. According to Worldpay’s 2020 Global Payments report, “buy now pay later” is the fastest growing e-commerce payment method globally. In North America, “buy now pay later” market share is expected to triple to 3% of the e-commerce payments market by 2023.

Risks

If Affirm is unable to attract additional consumers and merchants and retain relationships with existing consumers/merchant partners, results of operations and future prospects would be materially and adversely affected.

A large percentage of Affirm revenue is concentrated with a single merchant partner, Peloton (PTON), and the loss of this merchant partner or any other significant merchant relationships would materially and adversely affect business and future prospects.

Affirm operates in a highly competitive industry, and the inability to compete successfully would materially and adversely affect results of operations and future prospects.

Financials

Affirm (AFRM) plans to sell 24.6 million shares at a price range of $33 to $38. The company intends to raise as much as $1B in an IPO of its common stock at about $9.5B valuation. Affirm has raised a total of $1.5B in funding over 9 rounds. Their latest funding was raised in September 2020 from a Series G round with a post-money valuation of $4.2B. The last round share price was $19.93. The company booked $596M in revenue for the last 12 months. Contribution margin is around 45%. The company is growing rapidly with accelerating revenue growth of 98% YoY in Q3 2020.

Similar public companies include PayPal (P/S ratio is 11.3x with revenue growth of 25% and gross margin of 44%), Visa (P/S ratio is 21x with revenue decline of 17% and gross margin of 82%), Mastercard (P/S ratio is 22x with revenue decline of 14%) and Square (P/S ratio is 12.3x with revenue growth of 140% and gross margin of 30%). Affirm’s projected capitalization, given it maintains the current growth trajectory, will amount to $18 billion on the public market (expected P/S ratio is 30x). This investment idea has a high potential return of more than 40%.

How IPO Investments Work
1. Collection of funds

2-3 weeks before the start of the company publishes information about the opening of trading: financial statements for 3 years, a description of the company's business, plans for the future, as well as the risks that management sees in their own business. We analyze such offers and publish the best ones. Investors apply for deposits. Before the deadline for applications, you can change the request or cancel it.

Publication
21 Dec
Threshold amount
$50
2. Buy shares

We submit one large application for the purchase of shares by pre-subscription with reduced price to large investors. The application may be rejected in part or in full. Over the past three years, our applications have been rejected only three times. The next day, or every other day, we'll know at what price and at what percentage the order is executed, and we'll post it on «The my investment page».

Submit applications before
11 Jan
3. Start Bidding

The price of shares is rising from the first day due to the demand of investors deprived of the opportunity to buy shares before trading. Most of the stocks we've been recommending buying over the past three years have been starting to trade on the stock exchange at tens of percent higher than the price at which customers bought the shares. There comes a Lock up period when it is forbidden to sell shares purchased by subscription. Typically lasts 3 months.

Start Bidding
13 Jan
Return forecast
High (more than 40 %)
4. Receiving profit

After the expiration of the Lock Up period, the investment is automatically closed and the investor receives a profit on account of the deduction commissions UT. You can always view the results of your past investments in investment archive.

End
19 Apr
Early profit fixation

Although no shares are allowed to be sold during the lock-up period, our traders seek to offer investors fixed profit by way of using various financial instruments, including forwards, options, short positions etc.

From the investor’s point of view this means that he or she may close an investment by paying a certain part of its value (as a rule, approximately 15 percent). This is due to high prices for the instruments which are employed to ensure availability of fixed profit. As such, you shall press any relevant button in the Investor Account as soon as it is active.

The closing procedure is similar to commencement of investment business. You shall file a bid which is executed within a business day by UT. So, your investment is closed at the price currently prevailing on the stock exchange. However, we rarely recommend using this feature, since upon expiry of an applicable lock-up period the average performance is higher.

Fee

FOR ENTRY

3 per cent of the share price. This fee is charged as soon as your investment bid is confirmed.

FOR EXIT

1.75 per cent of the purchase price paid for your shares as soon as trading is closed. This fee is charged upon closure of any relevant investment.

SUCCESS

20 per cent of the profit your derive. This fee is charged only if you show positive performance as of the moment any relevant investment is closed.

TO EARLY EXIT

Usually, 15 per cent (depends on the stock exchange environment). It is calculated per each investment individually.

Advantages Enjoyed by Those Investing with United Traders

RELIABILITY

Our risk managers ensure proper support throughout the entire transaction.

IN THE PROFIT FROM THE FIRST DAY

Such an approach allows it to limit extra risks related to bankruptcy of start-ups and considerably increase profit vs investors purchasing shares on open Market.

LOW ENTRY THRESHOLD

Millions of dollars are required to buy shares on a subscription basis. We have generated a pool of traders and investors which enables any newbie to participate in any transaction as aforesaid by investing just USD50 or more.

Invest in IPO Affirm

This investment idea is no longer available. New applications are not accepted

View more ideas