Affirm extends rally on Cyber Monday boost as BNPL lending surges
By Medha Singh, Chibuike Oguh and Hannah Lang
(Reuters) -Shares of «buy now, pay later» provider Affirm Holdings (NASDAQ:AFRM) extended a rally on Tuesday following a rating upgrade and data showing that more price-conscious shoppers turned to BNPL services to fund Cyber Monday purchases.
Record sales of $12.4 billion on one of the country's busiest shopping days have highlighted the growing role of BNPL providers like Affirm, as well as rivals PayPal (NASDAQ:PYPL), Afterpay, Klarna and Zip, in driving online retail shopping.
U.S. BNPL use hit an all-time high on Cyber Monday, contributing $940 million in online spending, up 42.5% from a year earlier, Adobe (NASDAQ:ADBE) Analytics data showed. The number of items per order rose by 11%, according to Adobe, as shoppers used BNPL for increasingly larger carts.
BNPL providers partner with online merchants such as Amazon.com (NASDAQ:AMZN), Target and Walmart (NYSE:WMT) to extend loans to customers to cover purchases, which they pay back in installments. Their loans typically charge zero interest, helping to increase dramatically the affordability of online goods, particularly for shoppers who have lower credit scores.
Affirm's shares finished up 11.5% at $32.75 on Tuesday, a day after gaining 12% on Cyber Monday and following Black Friday, another day in which U.S. shoppers seized upon widespread discounts.
Jefferies analysts on Tuesday raised their target price on the San Francisco-based company from $9.50 to $30, citing increased loan demand, improved funding conditions and better credit performance of its securities.
Affirm's stock price has more than tripled this year, buoyed by increased demand for its services from customers faced with higher interest rates and
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