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$AFRM Thread....
According to $AFRM S-1, in North America, “buy now pay later” market share is expected to triple to 3% of the e-commerce payments market by 2023.
Let's dive into $AFRM....
According to $AFRM S-1, in North America, “buy now pay later” market share is expected to triple to 3% of the e-commerce payments market by 2023.
Let's dive into $AFRM....
Founded in 2012.
Max Levchin (one of Paypal mafia) is a founder and CEO. He owns 13.1% in the company. According to S-1, almost 100% of Levchin's total compensation is in equity incentives (Talking about skin in the game...)
Max Levchin (one of Paypal mafia) is a founder and CEO. He owns 13.1% in the company. According to S-1, almost 100% of Levchin's total compensation is in equity incentives (Talking about skin in the game...)
$AFRM is a point-of-sale BNPL solution that offers no hidden or late fees. They offer 0% APR option and customers know up-front how much interest they will get charged. This explains their high NPS score of 72
Currently, $AFRM has $4.5 million active customers and 7,900 merchants as of December 2020. They also have exclusive partnership with Shopify. According to $AFRM S-1, their customers consist of Millenials (48%), Gen-X (32%), Baby boomers (12%) และ Gen Z (7%)...
Competitive edge:
$AFRM uses AI/ML to create risk model which allows the company to have higher approval rate + lower fraud rate than traditional credit underwriting model. (20% higher according to S-1). This also allow their delinquency rate to improve over 66% from almost 3%
$AFRM uses AI/ML to create risk model which allows the company to have higher approval rate + lower fraud rate than traditional credit underwriting model. (20% higher according to S-1). This also allow their delinquency rate to improve over 66% from almost 3%
in 2019 to 1.1% in 2020. The portfolio Net Charge-offs provided in S-1 also shows that the model is working and is constantly improving....
$AFRM GMV mix includes wide range of industry. However, they have a high concentration risk from $PTON which comprises 30% of their GMV mix and 50% of their merchant revenue....
$AFRM flywheel
More customers -> larger ecosystem -> more merchants -> more products -> more transactions -> better model -> better experience
More customers -> larger ecosystem -> more merchants -> more products -> more transactions -> better model -> better experience
Risks -
$PTON revenue concentration risk
Lots of competitions in the BNPL space...seems like $AFRM is moving slower than $AFTPY as $AFTPY is currently having over 10k merchants compared to 7k merchants of $AFRM...
$AFRM GTM strategy seems slow...can someone please explain why?
$PTON revenue concentration risk
Lots of competitions in the BNPL space...seems like $AFRM is moving slower than $AFTPY as $AFTPY is currently having over 10k merchants compared to 7k merchants of $AFRM...
$AFRM GTM strategy seems slow...can someone please explain why?
In terms of valuation, $AFRM is currently trading at $19 B in market cap while $AFTPY is $27.34 B (as of April 23, 2021). EV/Sales (NTM) of $AFRM is 23.8x while $AFTPY is $28.7x. $AFTPY has better stock performance than $AFRM as well....
(Credit: chart from Koyfin)
(Credit: chart from Koyfin)
$AFTPY seems to havae better execution and GTM strategy and is growing faster even though they are bigger. Recently $AFTPY also partner with Adyen even though $AFRM has the partner with them first in 2020.
Disclosure: I don't own both $AFRM and $AFTPY.
Disclosure: I don't own both $AFRM and $AFTPY.
