Affirm Aims to Raise $935 Million in IPO

Lending startup Affirm is set to kick off the next IPO season.

The San Francisco-based company expects to raise as much as $935 million in its initial public offering, it said in a filing this Tuesday.

Affirm plans to price its shares on Nasdaq under the ticker AFRM between $33 and $38 each.

At the top range, it would have a market value of over $9 billion based on the outstanding shares listed. 

It would represent a more than three-fold jump from its last private funding round, when it was valued at less than $3 billion, according to PitchBook.

Including employee stock options and restricted share units, the valuation would reach more than $11 billion.

Affirm had planned to complete its IPO before the end of last year but decided to delay it by a few weeks.

The startup was founded in 2012 by PayPal co-founder Max Levchin to give people without credit history or savings accounts access to small loans, offering to finance online purchases such as furniture or electronics that can be paid back in monthly installments.

Affirm’s offering will probably be the first IPO in the U.S. in a year that can break another record.

In 2020, 454 offerings raised $167.2 billion in U.S. exchanges, compared with the previous record of $107.9 billion in 1999, amid the dot-com boom, according to Dealogic.

IPO euphoria is expected to continue in 2021. Some of the high-profile companies that should debut in the stock market in the next 12 months are “unicorns” like Robinhood, Instacart, and Coinbase.

Airbnb & DoorDash

Airbnb and DoorDash offerings were some of the hottest IPOs last year.

DoorDash’s debut was on December 9, and Airbnb started trading the next day. Both shares skyrocketed, with the food delivery company shares closing its first day 86% up, while the home rental firm stock jumped 114%.

About 25 Wall Street analysts started to cover both companies this Monday (Jan 4), as the IPO quiet period ended. In general, they expect substantial revenue growth for both.

For instance, Credit Suisse believes Airbnb will benefit from the “ongoing substitution effect away from hotels.” 

“We expect this substitution effect to accelerate further due to pandemic-driven changes in behavior, with incremental consumers likely trying the category for the first time and choosing to stick after a positive experience,” wrote analyst Stephen Ju in a note to investors.

Regarding DoorDash, JPMorgan’s outlook for the food delivery market is positive, despite the strong growth last year. “Growth will slow, but we also believe food delivery is a forever-changed category and activity will remain elevated as consumers continue to value convenience and selection, and restaurants continue to value the incremental revenue stream,” the investment bank analysts wrote.

Not everyone agrees, of course.

Boris Schlossberg, managing director of FX strategy to BK Asset, remains skeptical. In an interview with CNBC, he said, “we are going to move much more into the physical space in the spring, and the summertime and DoorDash’s business is going to slow down.”

Some analysts believe despite the growth projected for Airbnb’s business, the stock doesn’t have much room to go up.

“While we are bullish on Airbnb’s industry and business model, we see current valuation as being fair,” Morgan Stanley analysts wrote.

The investment firm, Wedbush Securities, shares the same opinion. According to its analysts, to justify a higher price, Airbnb would need to move to adjacent markets or wait until the market adjusts the current overvaluation.