Why Affirm Stock jumped 15% today

What happened

In recent months, buy now, pay later specialist Affirm holdings (NASDAQ: AFRM) has forged partnerships with Amazon, with Shopify, and with Walmart. I guess it was only a matter of time before Target (NYSE: TGT), too, would hop on the BNPL train.

And now it is. And Affirm stock is up 14.8% as of 1:11 p.m. EDT.

Image source: Getty Images.

So what

United States today broke that story, reporting today that Target has partnered with Affirm and Australian firm BNPL Sezzle to help customers “take advantage of our best deals.”

Customers making low value purchases will be able to use Sezzle to make payments over time with no interest or fees. Affirm will be offered as an option for customers spending more than $ 100 on a purchase from Target.

Now what

Now investors just need to see if all of this retailer enthusiasm for BNPL will translate into greater sales for the retailers who partner with Affirm to deliver it.

Beyond the news itself, I think perhaps the most important pieces of news today United States today The story (for investors) are the newspaper’s observations that “interest in store credit cards plunged in 2021” and “consumers were still slightly more likely to use store credit cards for holiday shopping plans to buy now, pay later “.

This doesn’t seem particularly conducive to Affirm’s growth prospects – its product is less popular than something else interest has “plunged” into. On the flip side, the newspaper also found that “consumers who use buy now, pay later tend to be younger and some are not eligible for credit cards.” Ultimately, then, BNPL’s success at Target, and at Walmart, Amazon, and Shopify, could depend on the size of this segment of customers who are not eligible for credit cards.