Affirm Holdings, a prominent player in the 'buy now, pay later' sector, has reported robust fiscal fourth-quarter earnings and projected an optimistic outlook. However, CEO Max Levchin highlighted that escalating gas prices are significantly impacting American shoppers.
Levchin stated in an interview with CNBC's "Squawk Box" that consumers are acutely aware of the higher fuel costs. "The U.S. consumer undoubtedly sees the higher gas prices, so can't, can't ignore that," he remarked. "They're also coming to us to help manage those prices across all the various inflationary points."
The national average gas price stood at $4.09 per gallon as of Friday, according to AAA. While this is a decrease from May's peak above $4.50, it remains significantly higher than pre-war levels. The average price was last below $3 on March 2.
Levchin explained that inflationary periods often see increased demand for Affirm's services as consumers become more strategic with their finances. "In times of inflation, we see more demand because folks are budgeting," he said. "They're more thoughtful about how they want to use the money, and we're there to help."
Affirm stock chart.
The annual inflation rate was reported at 3.7% in July, based on the latest personal consumption expenditures (PCE) price index data. The PCE, favored by the Federal Reserve for its forecasting, saw a 0.2% seasonally adjusted increase in July. Despite inflationary pressures, other economic indicators showed resilience, with personal income rising 0.4% and spending increasing 0.2% in July, both exceeding expectations.
These economic crosscurrents are a key consideration for the Federal Reserve and Chairman Kevin Warsh as they deliberate their next policy move, scheduled for a September meeting. Levchin acknowledged that while the consumer generally appears healthy, caution is warranted. "I do think that sustained pressure on prices isn't great in the long term, and so can't ignore that either," he commented.
Affirm released its Q4 results after market close on Thursday, revealing revenue of $1.17 billion, surpassing the LSEG estimate of $1.11 billion. The company forecasts fiscal first-quarter revenue between $1.19 billion and $1.22 billion, exceeding the Street's expectation of $1.16 billion. Gross merchandise volume also performed strongly, reaching $14.1 billion, well above the $13.39 billion anticipated by StreetAccount.
