The writing was on the wall when To affirm (NASDAQ: AFRM) announced the terms of its public debut. While the company might not be a household name, it’s the idea of Max Levchin, one of the co-founders of the mainstay of payment processing. Pay Pal (NASDAQ: PYPL). The online lender offers finance and installment loans to customers on e-commerce sites.
After initially planning to price its shares between $ 33 and $ 38, strong investor interest pushed that range to $ 41 to $ 44 per share. On the eve of its debut, Affirm valued its shares above the high end at $ 49. Even that was not enough to dampen investor enthusiasm.
The company’s initial public offering (IPO) followed a pattern that repeated itself several times in late 2020 as investors bought shares at a breakneck pace. The stock started trading at around 12:20 p.m. EST at $ 90.90, almost 86% above the offer price, and never looked back. The stock ended the day at $ 97.24, more than 98% above its offer price.
Affirm offered 24.6 million shares to investors. If the underwriters exercised their right to sell an additional 3.69 million shares, the offer could have raised as much as $ 1.38 billion, valuing the company at around $ 23 billion.
For the fiscal year ended June 30, 2020, Affirm reported revenue of approximately $ 509 million, up 92% year-over-year. At the same time, the company was able to reduce its net loss to $ 113 million, a slight improvement from a loss of $ 120 million the year before. Affirm’s growth accelerated in the first three months of fiscal 2020, with revenue increasing 98% year over year to $ 174 million. The company cut its red ink in half, with a net loss of $ 15 million, from $ 31 million in the previous year quarter.
It is important to note that Interactive Platoon (NASDAQ: PTON) is Affirm’s largest customer, accounting for 30% of its turnover in the last quarter.