Buy Now, Pay Later (BNPL) Industry Faces Uncertain Future Despite Recent Growth: While Affirm and other BNPL companies have seen significant expansion, rising default rates and a weakening economy raise investor concerns. Is this a temporary setback or a sign of trouble ahead for the booming BNPL sector?
Affirm CEO Max Levchin at the Exclusive Allen & Company Sun Valley Conference 2022: Amidst industry headwinds, the Affirm founder attended the prestigious Sun Valley Conference, bringing together leading figures from media, finance, and technology. This exclusive event took place at the Sun Valley Resort in Idaho on July 7, 2022
Affirm Holdings Stock Plunges 17% in 2025: Buy Now, Pay Later (BNPL) Growth Concerns Fuel Decline. Lower-than-expected Q[Quarter Number] growth predictions trigger investor sell-off, raising questions about the future of the BNPL industry amid rising default rates and economic uncertainty
Buy Now, Pay Later (BNPL) default rates are climbing, yet industry leaders remain unconcerned. Despite this and a weak Q1 GDP report, some see long-term potential in the BNPL market, even as Affirm stock falls. Is the current downturn a buying opportunity, or a sign of deeper trouble in the rapidly expanding BNPL sector?
Weak Q1 GDP Report Casts Shadow on Buy Now, Pay Later Industry Growth
Affirm Holdings (AFRM) Stock Down 17% in 2025: Buy Now, Pay Later (BNPL) Sector Faces Headwinds? Despite past growth, Affirm's stock price has fallen 17% in 2025, fueled by a weaker-than-expected Q1 forecast and rising BNPL default rates. Is this a buying opportunity or a sign of broader industry trouble?
Affirm Stock: A 126% Surge in Three Years, Now Facing Headwinds? Despite a remarkable 126% stock price increase to $52/share over the past three years, and explosive Buy Now, Pay Later (BNPL) industry growth exceeding 50% annually, Affirm Holdings faces challenges in 2025. Recent setbacks include a 17% stock drop and lowered growth projections, raising questions about its future
Is Affirm Stock a Bargain After a Weak Forecast? Despite Q3 revenue and profit growth, Affirm Holdings (AFRM) stock is down 17% in 2025. Rising BNPL default rates and a weaker economy raise concerns, but industry leadership and long-term strategy offer a bullish counterpoint. Is this Buy Now, Pay Later (BNPL) leader a compelling investment opportunity?
Affirm (AFRM) stock plunged 13% earlier this month following a weak Q[Quarter Number] forecast and concerns over its 0% APR loan strategy, as reported by CNBC. Rising BNPL (Buy Now, Pay Later) default rates at competitors like Klarna, coupled with a weakening economy, fuel bearish sentiment and fears of increased bad debt. This downturn follows a 17% drop in AFRM stock in 2025, despite previous strong growth
Affirm's long-term vision and industry leadership are key reasons why investors remain bullish, despite recent market headwinds. CEO Max Levchin highlights the company's unique approach, stating it took a decade for the market to fully grasp Affirm's innovative Buy Now, Pay Later (BNPL) model and its significant impact
Affirm Stock Undervalued? Wall Street analysts see significant upside potential, with an average price target $67.18—29% above the current trading price. Is this Buy Now, Pay Later leader a bargain despite recent growth concerns and rising default rates?
Affirm's Q3 results: Revenue met expectations, profits exceeded them, but Q4 revenue guidance fell short. Despite strong Q3 performance, lower-than-expected Q4 projections caused a 17% stock drop in 2025. Is Affirm stock now a bargain, or does the weaker economic outlook and rising BNPL default rates signal further challenges?
Affirm Stock: Down 17% in 2025 Despite Past Growth. Buy Now, Pay Later (BNPL) leader Affirm faces headwinds: rising default rates, weaker economic forecasts, and lower-than-expected Q4 growth. Is this a buying opportunity or a sign of trouble for the BNPL industry? Analyze the key figures and assess the future of Affirm Holdings
Affirm's Buy Now, Pay Later (BNPL) loan volume fluctuates with consumer spending on electronics, apparel, and travel. Despite achieving 22 million customers in Q3 (a 10% increase), Affirm's stock has fallen 17% in 2025 due to a lower-than-expected growth forecast. This reflects broader BNPL industry concerns amidst rising default rates and economic slowdown
Affirm Card's Gross Merchandise Value (GMV) surged 115% year-over-year, fueled by strategic partnerships with Apple, Amazon, and Shopify. Active cardholders more than doubled, demonstrating strong growth in the Buy Now, Pay Later (BNPL) market
The company is also offering 0% interest loans in which merchants — and sometimes manufacturers — subsidize borrowing costs to drive sales. Such loans increased 44% — serving as an alternative to a traditional merchant discount. “It may be an expensive net discount rate, but it’s better than 10% off,” Affirm Chief Financial Officer Rob O’Hare told CNBC.
Affirm says these loans extend the lifetime value of its customers. “Every time we sign someone new through a 0% promo, some number of months or quarters from now, that’s a prime candidate for the Affirm Card, and that’s a lifetime value booster,” Levchin said on the company’s Q3 earnings call.
The growth in BNPL loans has been significant in recent years. This growth has drawn new investment into the industry and loan default rates are rising for some large participants.
Since 2021, the BNPL business has accelerated at a 55% average annual rate from $97 billion, noted my June 2022 Forbes post, to $560 billion in 2025, according to Research and Markets.
To finance that growth, Affirm has been securitizing — bundling and selling — some 30% of its loans.
More recently, the rise of private credit has enabled Affirm to sell loans directly to institutions such as Liberty Mutual and Prudential. Moreover, this year private credit firm Sixth Street initiated a three year deal to buy $4 billion of Affirm’s loans, according to the Wall Street Journal.
Recent data suggest BNPL credit problems could rise. How so? Nearly two-thirds of BNPL loans went to borrowers with risky credit scores, according to a January report from the Consumer Financial Protection Bureau.
“Americans were using ‘buy now, pay later’ as a Band-Aid on top of their credit card debt,” Julie Margetta Morgan, a former CFPB official who is now president of the Century Foundation, told the New York Times. “We look at it as a kind of bellwether of risks to the overall economy,” she added.
BNPL providers downplay these risks. For example, Klarna — the privately held Stockholm-based BNPL provider which recently paused its IPO — suffered a 17% rise in credit losses in May.
Klarna said the losses were trivial. “There’s nothing troubling or worrisome from this data,” company spokeswoman Clare Nordstrom told the Times. Affirm was similarly upbeat. “We really aren’t seeing anything we would label as signs of stress with our borrowers,” O’Hare said, according to the Times.
BNPL customers would be especially vulnerable if the economy worsened — which is why during the Biden era, the CFPB “called for measures to safeguard them,” the Times wrote.
Unfortunately, the economy contracted in the first quarter of 2025 — with gross domestic product falling at a 0.2% rate, according to the Bureau of Economic Analysis.
As U.S. household finances get worse, BNPL consumers and providers could suffer. “Consumers are going to be squeezed and more reliant on these products,” Morgan explained to the Times, “and the companies are being offered a free pass to construct those products in ways that are the most profitable to them.”
Given the 29% upside implicit in Affirm’s price target, the bulls may prevail over the bears.
Affirm bears argue the company’s profitability fell short of expectations because the lower growth in GMV due to a surge in 0% APR loans was not enough to offset their lower margins — as measured by revenue less transaction costs.
This is why Affirm fell short of investor expectations. The rise in 0% loans “led to a lower take rate and RLTC margin than most forecasts,” Citizens wrote, according to CNBC.
Two other analysts remain bullish on Affirm. Goldman called the company a “strong category leader in BNPL and a share gainer vs. legacy credit providers,” noted CNBC. Barclays is bullish on recent partnerships such as the one between Affirm and Costco.
Despite uncertainty, Affirm sees consumers continuing to spend. “People are stressed out about the economy, yet they’re shopping, they’re buying, and they’re paying their bills — at least they’re paying their bills back to us on time,” Levchin told CNBC.
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