Max Levchin

Summary List Placement

After a brief delay, Affirm’s IPO is pushing ahead. 

The buy now, pay later player is expected to make its public-market debut soon, looking to raise over $1 billion, according to a revised S-1 filing published Monday. Affirm is looking to issue 24.6 million shares listed under the symbol AFRM on Nasdaq, priced between $41 and $44, potentially valuing the fintech at over $10 billion. 

The company first said it would price shares between $33 and $38 in a filing earlier this month. 

Morgan Stanley is serving as lead underwriter, along with Goldman Sachs and Allen & Company. 

Buy now, pay later is the fastest-growing segment in consumer lending, according to a CB Insights report.

And Affirm, one of the leaders in the space, has taken off. With more than 6 million users, Affirm saw 77% growth in purchase volume year-over-year in its 2020 financial year-end results. From the proliferation of e-commerce to consumers embracing of digital finance, a number of tailwinds in 2020 helped make Affirm one of the year’s fintech standouts.

Originally, Affirm had planned to go public in 2020. But in December, The Wall Street Journal reported the fintech was delaying its listing until January, at the earliest. The story cited the extreme IPO pops that DoorDash and Airbnb saw as one of the reasons for the pause, in addition to delays at the Securities and Exchange Commission processing IPO requests. 

Read more: Why the IPO market is exploding in a frenzy that rivals even the 1999 euphoria

On a vocal mission of honest finance, founder and CEO Max Levchin — of PayPal Mafia fame — founded Affirm as an alternative to credit cards.

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Credit cards “failed to keep up with the evolving world,” Levchin said in his opening letter in Affirm’s S-1 filing.

“One could argue cards have devolved, even become corrupted. The barely-readable fine print makes only one thing clear to consumers: You’ll never know exactly what your purchase will really cost you,” Levchin wrote.

How Affirm makes makes loans

Affirm offers loans issued at the point-of-sale, paid in installments over periods ranging from six to 48 weeks. Rates range from 0% to 30% (around 40% of Affirm’s loans are issued with 0% interest). And like many consumer fintechs, Affirm doesn’t charge fees to consumers. There’s no deferred interest, and users see what they’ll pay with each installment, interest included, before agreeing to the loan. 

Since its founding in 2012, Affirm has raised $1.5 billion to date from investors including Andreessen Horowitz, Founders Fund, and Spark Capital.

In the coming years, buy now, pay later is expected to keep growing. In the US, it’s set to grow from 1% to 3% of e-commerce payments by 2023, according to Worldpay’s 2020 Global Payments Report. And in EMEA, where it currently represents 6% of online purchases, buy now, pay later is projected to account for 9% of e-commerce purchases in 2023.

Business Insider spoke to four industry experts, in addition to analyzing recent industry reports and Affirm’s S-1 filing, to understand the …read more

Source:: Business Insider

      

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