Affirm Turns Profitable, But Klarna’s IPO Could Reshape the Trend
AFRM finally delivered its first year of profits, sending shares briefly past $100. But with Klarna preparing a $14B IPO and momentum already cooling, investors may want to wait for a better entry.
Introduction
Affirm AFRM 0.00%↑ has done what many doubted was possible: it posted its first profitable year since going public. Revenue climbed 39% to $3.2B, net income flipped positive at $52M, and free cash flow turned positive at $602M. The stock surged above $100 in celebration before quickly slipping back into the low $80s.
The timing couldn’t be more interesting. Swedish rival Klarna is heading to the New York Stock Exchange with a long-awaited IPO that could value it around $14B, down sharply from its pandemic-era peak but still one of the biggest fintech listings of the year. The debut will serve as a benchmark for the entire buy now, pay later (BNPL) space.
That leaves investors with a dilemma: AFRM 0.00%↑ fundamentals are improving, but the market may already be re-pricing BNPL stocks. With momentum fading and Klarna about to reset the sector’s multiples, patience may prove the smarter trade.
TL;DR (Key Takeaways):
Profit milestone: Affirm just delivered its first profitable year, with $3.2B in revenue (+39% YoY) and net income of $52M.
Stock reaction: Shares spiked above $100 but have since pulled back to ~$82, showing signs of cooling momentum.
Klarna IPO: The Swedish BNPL giant plans a U.S. IPO in September at a ~$14B valuation, a key event that could lift or pressure AFRM depending on investor appetite.
Risk/reward: While AFRM 0.00%↑ model is validated, the stock looks set for a corrective phase. A more attractive entry lies in the $65–70 zone.
Bottom line: Correction first, opportunity second. Klarna’s IPO will be the real tell for AFRM’s next move.
Klarna IPO: The Sector Catalyst
While Affirm just turned profitable, the spotlight in BNPL isn’t only on AFRM. Klarna, its Swedish rival and one of the largest global BNPL players, has revived its long-delayed U.S. IPO and plans to list on the NYSE under ticker $KLAR next week.
The numbers:
IPO aims to raise up to $1.27B, selling ~34M shares at $35–37 each.
Valuation expected between $12.5–14B, a steep discount from its $46B private peak in 2021.
Only a fraction of shares are newly issued, meaning Klarna itself won’t see much fresh capital. Most proceeds go to existing holders.
Klarna is still losing money, reporting Q2 revenue of $823M (+20% YoY) but a $53M net loss. Yet, it’s diversifying beyond BNPL into debit cards, subscriptions, and even exploring a U.S. banking license.
Why it matters for AFRM 0.00%↑:
Klarna’s IPO will effectively reset public-market expectations for the BNPL sector.
A strong debut could expand multiples across the space, pulling AFRM higher.
A weak reception risks compressing AFRM’s valuation just as it celebrates its first year of profitability.
In other words, Klarna isn’t just a competitor. The IPO will be a mirror for investor sentiment in BNPL. AFRM’s stock may move as much on KLAR’s IPO headlines as on its own earnings last week.
Fundamentals
Revenue Growth: $3.22B TTM, up from $2.32B in FY24 (+39% YoY).
Profitability Turn: Net income of $52M vs. ($517M) loss last year. Diluted EPS flipped to +$0.15 from -$1.67.
Margins: Gross margin steady at ~68% despite higher funding costs. EBITDA swung positive at $712M vs. ($635M) in FY23.
Balance Sheet: $11.2B assets, $7.9B debt, $1.76B cash —> net debt ~$6.5B. High leverage but working capital covers near-term obligations.
Cash Flow: Free cash flow positive at $602M, a stark reversal from negative ($274M) in FY22.
Analyst Consensus: PT range $64–115, avg. $93. Neutral skew: 13 Buy, 13 Hold, 8 Sell.
Takeaway: AFRM has crossed the profitability threshold, but debt levels and sensitivity to funding rates keep it at a high beta.
Technicals
Multi-timeframe Elliott Wave
Weekly and Daily:
Wave 5 appears completed at $100, with a corrective A wave targeting mid $70s to high $50s.
MACD positive with a bearish crossover, and RSI in the mid 50s and 60s.
2h/1h:
Wave 5 peak confirmed, heading into ABC correction. Pullback ongoing towards $76 with interim bounce zones at $88–93 (0.382–0.618 retrace of wave A).
MACD bearish direction taking RSI closer to oversold territory
Intraday (30m/5m/1m): Price rejected 20/50 EMA clusters. RSI oversold (<35) shows bounce risk, but structure remains corrective.
Levels to Watch:
Resistance: $88-93 (Fib cluster + EMA rejection).
Support: $76.5 (0.618), then $65-70 zone (major Fib/daily EMA confluence).
Bear invalidation: Break above $100 with volume will signal a new bullish leg.
Trade Plan
In all cases, the Klarna IPO next week will heavily affect AFRM 0.00%↑ performance in the short-term. Priced at $35 to $37, a strong debut could bolster Affirm’s price.
Base Case (60% probability): AFRM 0.00%↑ retraces toward $65–70 before finding support. That’s the reload zone for long-term bulls.
Bullish Scenario (25%): Price stabilizes at $81–83 (EMA support) and reclaims $90s, targeting $110 (Fib 1.618).
Bearish Scenario (15%): Breaks $65 opens the door to $57, deeper retrace toward $50s.
Execution:
Traders: Accumulate between $78-$81 with targets towards $88-$93
Stops below $76
Investors: Accumulate only on $65-70 retrace with view to hold into $110–120 long term.
Risk/Reward: At $82, downside to $65 (~20%) outweighs near-term upside (~10%), so patience favors waiting for better entry.
Conclusion
Affirm has finally crossed into profitability, a milestone that gives real weight to its long-term growth story. But the stock market isn’t just about numbers on a balance sheet. With Klarna preparing to go public at a much lower valuation than its pandemic peak, investors are about to get a fresh benchmark for what BNPL companies are truly worth.
AFRM 0.00%↑ ’s surge past $100 already priced in much of the good news. Its pullback into the $80s suggests momentum has cooled, and the charts point toward a period of digestion before the next big leg higher.
For long-term investors, this isn’t a reason to walk away. It’s a reason to wait. A deeper reset into the $65–70 range could offer the kind of entry point that aligns improving fundamentals with a cleaner technical base.
Bottom line: Affirm has proved its model works, but the real re-rating of BNPL will happen when Klarna rings the bell on Wall Street. Until then, patience is the trade.
-IWP