Affirm's weaker revenue guidance triggers 8% drop in stock

In the United States, Affirm, a leading provider of buy now, pay later loans, reported its third-quarter earnings results for the year 2025. The company achieved a revenue of $783 million, reflecting a notable year-over-year increase of 36% compared to the previous year. This growth was accompanied by an earnings per share of one cent, surpassing analysts' expectations of a loss of three cents. Gross merchandise volume (GMV) reached $8.6 billion during this quarter, exceeding average estimates, and contributed to a significant rise in overall sales, highlighting the company's expanding market presence. Despite these positive quarterly results, the company's guidance for the upcoming fourth quarter fell below market expectations, as it projected a revenue range of $815 million to $845 million, with a midpoint of $830 million, which was lower than the consensus estimate of $841 million. The disparity between strong current performance and cautious future outlook negatively impacted investor sentiment, leading to an 8% decline in Affirm shares during extended trading hours following the announcement. This situation illustrates the challenges Affirm faces in maintaining growth amid a shifting economic environment. Moreover, the company's gross merchandise volume, a crucial metric in understanding transaction value, saw a noteworthy 36% rise from the previous year. The Affirm Card has played a vital role in enhancing customer engagement, boasting a 115% increase in GMV from the previous year. This achievement suggests that Affirm's various partnerships with major brands like Apple, Amazon, and Shopify are contributing positively to its overall transaction volume, and it serves as a counterpart to challenges in the broader economy where certain consumer segments are adjusting their spending habits. As Affirm navigates these complexities, the company continues to diversify its approach through strategic partnerships and product offerings. The recent decisions made by regulatory bodies, including the Consumer Financial Protection Bureau's move to halt enforcement of certain rules affecting buy now, pay later services, are also impacting the environment in which Affirm operates. This regulatory landscape, combined with market dynamics, suggests that while Affirm is experiencing growth, it must remain vigilant in addressing investor concerns while capitalizing on its strengths to drive future profitability.