Shares of Buy Now, Pay Later (BNPL) providers, Affirm Holdings and Block (parent company of Afterpay), fell as markets closed, disrupting their ongoing upward trajectory. This occurred despite reporting their latest earnings results which either met or outperformed expectations. Affirm disclosed a revenue of $698 million (41% YoY increase) and losses of $100 million for the first quarter of the fiscal year. On the other hand, Block reported $5.98 billion in revenue and a net income of $283.7 million.
The BNPL model allows users to break their purchases into fixed allotments using short-term loans. The fintech firms earn by charging merchants for providing these loans, and through interest and overdue payment fees. The holiday season is viewed as a critical period for expanding these services. Affirm expects more users with interest-free offers during holidays, while Block plans to strengthen Afterpay's usage. Both firms reflected a sharp spike in quarterly revenue in the last quarter of 2023.
The ongoing decline in share prices comes amid these optimistic growth strategies. Affirm saw an 11% decrease aligning with the year-to-date drop, while Block shares fell by around 4%, marking a 7% decline for 2024.