Affirm Holdings (NASDAQ: AFRM) is getting another vote of confidence from Wall Street as one analyst says several powerful trends could push the stock much higher.
Bernstein analysts, for example, just initiated coverage of the buy now, pay later (BNPL) company with an Outperform rating and a $100 price target. Analyst Harshita Rawat believes Affirm is in the right place at the right time. “Affirm, in our view, is at a unique intersection of several tailwinds—expanding total addressable market (TAM), compounding network effects, and several optionalities,” she said, as quoted by CNBC.
Affirm Is Positioned for a Growing BNPL Opportunity
Rawat says one of the company’s biggest strengths is that its market continues to grow.
“The TAM is sizable, no matter how you slice it,” she added. “Affirm’s product velocity has meant that the TAM is also constantly evolving into new verticals, channels, and merchants.”
Even after years of rapid growth, buy now, pay later still makes up only about 5% of U.S. e-commerce sales and just 1% of overall card spending, according to Bernstein. That leaves plenty of room for future growth.
Large retailers are helping drive that trend. Companies like Amazon and Shopify have added buy now, pay later options to their checkout pages because installment payments often increase sales and encourage customers to spend more.
As more merchants adopt the payment option, companies like Affirm could see transaction volumes continue climbing.
Buy Now, Pay Later Adoption Is Expanding
The global buy now, pay later market was worth about $156.6 billion in 2023. Some forecasts expect that figure to grow to more than $1 trillion by 2028 as more consumers and businesses adopt installment financing.
Consumer spending habits are also changing.
Americans are carrying record levels of debt. Total household debt recently climbed to $18.2 trillion, making many consumers more interested in flexible payment options. And instead of putting large purchases on credit cards, many shoppers are choosing to split payments into smaller installments.
That trend is spreading beyond expensive purchases.
According to a recent LendingTree survey cited by CBS News, about one in four Americans now use buy now, pay later loans to purchase groceries, up from 14% a year ago. Consumers are also using installment payments more often for clothing, electronics, and household goods.
The wider adoption suggests buy now, pay later is becoming part of everyday shopping rather than just a way to finance big-ticket items.
That could be good news for Affirm.
The company continues adding new merchants while expanding into more industries. Every new retailer gives Affirm access to more customers. At the same time, a growing customer base makes the platform more attractive to additional merchants, creating a cycle that can support long-term growth.
There Are Still Risks.
Higher interest rates, rising loan defaults, tougher regulations, and growing competition could all slow the company’s momentum. Several large payment companies and fintech firms are investing heavily in the buy now, pay later space.
Still, the long-term outlook remains encouraging.
The market is still relatively small compared with traditional credit card spending, yet adoption continues to accelerate. With strong partnerships, growing consumer demand, and a rapidly expanding market, AFRM appears well positioned to benefit from one of the fastest-growing trends in financial technology.
For investors looking for exposure to the fintech sector, AFRM could be one of the strongest growth stories over the next several years.
