Affirm Faces Stock Drop After Walmart Switch to Klarna

Affirm Holdings hit by stock volatility as Walmart picks Klarna. Investors eye opportunities amid concerns of long-term impacts on revenue and market share.

Date: 23-03-2025

AI Rating: 7

Impact of Walmart's Decision
Walmart's choice to partner exclusively with Klarna is a significant event impacting Affirm Holdings. The immediate result was a sharp 12% drop in Affirm's stock price, raising apprehensions among investors regarding revenue loss and diminished market share. Walmart's status as a major commerce platform amplifies these concerns despite Affirm boasting a robust and diverse merchant network.

Analysis of Financial Metrics
The report provides critical insights into Affirm's financial performance amidst these challenges. The earnings report for Q2 2025 highlighted an earnings per share (EPS) of $0.23, surpassing analyst expectations significantly by $0.44. Furthermore, the Adjusted Operating Income margin exceeded 20%, with forward guidance indicating a continued strong performance in the next quarter (21-23%).

Revenue Growth and Active Users
Affirm's year-over-year revenue growth stands impressively at 47%, driven by a robust increase in Gross Merchandise Volume (GMV) of 35% and a notable growth in its active consumer base, reaching 21 million users. This data shows that, despite formidable competition, Affirm's underlying business fundamentals remain resilient and point towards potential longevity and success in the market.

Conclusion
In conclusion, while the loss of Walmart as a partner is indeed damaging, Affirm's diverse partnerships, coupled with solid financial performance metrics and a proactive approach to market expansion, suggest that the market's reaction might be an overestimation of long-term impacts. Investors may want to watch closely for signs of recovery and growth, potentially viewing the current price dip as a viable entry point.

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