Interesting. Overall, I agree with everyone else - Affirm looks like a healthy company.<p>Major takeaways:<p>1.5% write-off rate for their jan 2020 vintage is very healthy - comparable to the long-term trend for unsecured superprime consumer debt. Given the (I suspect) lower average creditworthiness of Affirm customers, this is a great number. I'd be curious to see their long-term trend for same-age vintages, however. In consumer credit it's well known that all the stimulus support in 2020 has significantly depressed defaults. It would be interesting to see if this is a fluke, or if this is actually what their charge-off rate actually looks like in a normal environment/part of a bigger trend.<p>I'm a little skeptical of their claim to use ML & build a data moat for significantly better underwriting decisions. Consumer credit laws in the US so severely restrict what you can use for credit scoring purposes that better underwriting through data is basically a lost cause, absent some specific customer segment that has special credit situations.<p>Finally, as others have noted, 30% of revenue just from Peloton is an enormous number.
Wonder if I'm the only one surprised by their actual revenue model. I had always assumed they made money off loan interest from consumers which they do, but it turns out over half of their 2020 revenue came from merchant fees instead.<p>I just went through the Peloton flow to see for myself and indeed there's a 0% APR option for 3 years so it's clearly being paid for by Peloton.<p>It also explains to me why people might choose to use Affirm even if they could afford the upfront cost.
The floodgates in 2020 have opened with IPOs of alot of these unicorns, Palantir, doordash, airbnb, affirm, jfrog, snowflake, asana. I wonder why the sudden timeframe to go public. My guess is they want to ride the wave of stimulus money that has been going on during the spring/summer and the 2nd round which has yet to happen.
There is something fishy about selling a product with 0% APR - it means as a consumer you're actually WORSE off if you DON'T get the loan (since you would earn interest on the cash in your account). Forcing people to borrow when they don't have to is a strange way to make money off fees?
> Our agreement with one of our originating bank partners, Cross River Bank, which has originated the substantial majority of loans facilitated through our platform to date, is non-exclusive, short-term in duration and subject to termination by Cross River Bank upon the occurrence of certain events, including our failure to comply with applicable regulatory requirements. If that agreement is terminated, and we are unable to replace the commitments of Cross River Bank, our business, results of operations, financial condition, and future prospects would be materially and adversely affected.<p>Affirm is effectively a broker for loans issued by Cross River Bank
affirm is one of those things that was pretty interesting. Coming from a country where micro-installments at PoS was standard, i always thought it was really interesting the US didn't have it.<p>Good for them, I'll be buying shortly after their IPO.
Wow, kind of amazing that they're not losing tons of money through sales + marketing like every other IPO lately who lose 50% there. (they are losing money though). A little scary though, how much money they lose through bad credit write-offs, and what's the item about a huge loss for loan purchase commitments, both years?<p>Aside from those, they could be a really attractive business.