Affirm (AFRM) stock rose as much as 13% on Tuesday morning following news that the company will integrate its buy now, pay later feature into Walmart’s (WMT) self-checkout line.
Shoppers can already use Affirm to decentralize payments for purchases made at Walmart.com, the company’s Auto Centers, Vision Centers, and regular checkout lines with cashiers.
In other words, this is an incremental product update to a solution already available to the majority of Walmart shoppers. If Affirm’s partnerships with retailers are driving some business outcomes (more sales, more customers, etc.), those outcomes are already being driven.
But the fact that this update is pushing up the stock price shows how difficult this market is for many investors who are still holding positions from the 2022 era.data from FinViz Show About 21% of Affirm’s float is sold short, meaning short sellers are betting the stock will fall. For context, most companies have short floats of 1% or less.
If the market moves against them and short sellers go in the wrong direction, short sellers are often locked out of their positions even if their fundamental thinking has not changed significantly.
Affirm stock has fallen more than 90% from its high in late 2021 to its low earlier this year. Traders saw the stock as likely to bear the brunt of rising interest rates and consumer concerns about a slowdown. And stock prices have fallen proportionately.
But times have changed, both in the market and the economy.
There are signs that things are improving for BNPL plays like Affirm. According to Adobe Analytics, usage of these services increased by 40% on Cyber Monday compared to last year.
And the stock’s price movements in recent months (Afirm stock is up 180% since Nov. 1, and the stock is up nearly 500% this year) have shown clear signs that traders are being forced out of bearish positions. Showing.
If a product update causes a company’s stock price to rise by double digit points, and the stock is heavily shorted, these moves are more likely to represent a meaningful improvement in the market’s view of the ultimate value of the company’s discounted future flows. It’s likely to be about positioning. In a market that is rapidly changing direction.
Because while Affirm is not a member of the Magnificent Seven or the remaining 493 stocks in the S&P 500, these changes have ripple effects across sectors, styles, and sizes.
