Affirm (NASDAQ: AFRM) stock price has come under pressure since January as concerns about competition, interest rates, and growth remained. After peaking at $52.65 in January, it has dropped by over 34% to $34.80, meaning that it is in a deep bear market. Its market cap has moved to about $9.65 billion.

Affirm’s stock price crashed immediately after publishing its first-quarter financial results, which I believe were remarkable.

Its Gross Merchandise Volume (GMV) rose by 36% to over $6.3 billion, meaning that the company is continuing to gain market share in the BNPL industry. 

Revenue jumped by 51% to over $576 million from over $381 million in the same period in 2023. It also continued growing its customers, with the number of users soaring by 18% to 17.8 million. That makes it bigger than Afterpay, which has 13 million users.

Affirm also expects that its business will continue doing well. Its GMV for the current quarter will be between $6.75 billion and $6.95 billion while its revenue will be between $585 million and $605 million.

Altogether, my view is that Affirm will continue growing its market share even as competition from AfterPay, Klarna, and Zip intensifies. While there are many BNPL companies in the industry, my view is that it will narrow down through consolidation in the next few years.

Also, it is important to point out that Affirm has been stress-tested since 2022 as interest rates have soared to their highest point in over two decades. As a company that thrived in the era of zero-interest rates, there were questions about whether it would thrive when they jumped. 

In reality, Affirm has continued firing on all cylinders as its total revenue rose from $264 million in 2019 to over $1.58 billion in 2024. Analysts expect that its revenue will soar to $2.2 billion this year and $2.75 billion in 2025.

The concern about interest rates was because of Affirm’s business model. The company raises capital and then provides 0% interest rates to customers. It makes money by charging a small commission for each item it funds. It has also introduced rates for longer plans. 

Affirm has taken some market share from credit card companies like Visa and Mastercard and this trend will continue since it offers better terms.

The challenge for the company is that it has continued to make substantial losses. Its net loss in the last financial year was over $985 million. The most recent results showed that it narrowed its loss to $133 million from $205 million a year earlier. 

Affirm will be a top beneficiary when interest rates start falling, which is expected to come later this year. Lower rates will supercharge consumer spending and its commissions.

AFRM chart by TradingView

The AFRM share price bottomed at $8.65 in May last year and then soared to a high of $52.65 in January. It then moved into a deep bear market to trade at around $35. 

A closer look shows that it formed a descending channel shown in green. It is also consolidating at the 100 and 50-day Exponential Moving Averages (EMA). I suspect that the stock will have a bullish breakout later this year, a move that could see it rise to $52.65, its highest point in January.

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