GIC-backed lender Affirm almost doubles in debut after $1.59 billion IPO

Affirm was founded in 2012 by Mr Max Levchin, who also co-founded PayPal Holdings.
Affirm was founded in 2012 by Mr Max Levchin, who also co-founded PayPal Holdings.PHOTO: BLOOMBERG

NEW YORK (Bloomberg) - Affirm Holdings almost doubled in its public market debut, the latest multibillion-dollar technology company to start trading significantly higher than its initial public offering price.

Shares of the San Francisco-based company, which provides installment loans to online shoppers, closed up 98 per cent to US$97.24 in New York trading after rising as much as 110 per cent earlier on Wednesday (Jan 13). The company sold 24.6 million shares at US$49 each in Tuesday's IPO to raise US$1.2 billion (S$1.59 billion), pricing the stock above a range that had already been increased.

Affirm closed Wednesday with a market value of more than US$23 billion. The company has a fully diluted valuation of almost US$30 billion, including options and restricted stock units, according to Bloomberg calculations.

Airbnb and DoorDash each soared above their IPO prices when they went public in December, showing the appetite for tech listings - especially among retail investors -- and raising questions about how the deals were priced. Airbnb currently trades about 150 per cent higher than its listing at a market value of more than US$100 billion, while DoorDash is up about 94 per cent.

Poshmark, Petco

Affirm's IPO is set to be followed by several other high-profile listings. Online marketplace for secondhand luxury goods Poshmark and pet supply retailer Petco Animal Supplies are holding share sales on Wednesday. Mobile game developer Playtika Holdings and auto service and supply company Driven Brands Holdings are on deck for Thursday.

Founded in 2017 by PayPal Holdings' co-founder Max Levchin, Affirm counts Singapore's GIC, Khosla Ventures, Founders Fund, Lightspeed Venture Partners and Shopify among its investors. Mr Levchin remains the biggest shareholder after the listing.

Mr Levchin, Affirm's chairman and chief executive officer, said the company has just renewed its alliance with its biggest merchant partner, home exercise company Peloton Interactive Inc.

"Peloton has been a great partner to us," Mr Levchin said. "We're both good to each other, is one way to put it."

Affirm sees itself as possibly expanding through acquisitions, he added.

For the third quarter, Affirm had a net loss of US$15 million on revenue of US$174 million, compared with a loss of US$31 million on revenue of US$88 million during the same period in 2019, according to its filing.

Peloton Dependent

Peloton was by far Affirm's most important merchant partner, accounting for 30 per cent of its total revenue in the third quarter. Its top 10 merchants including Peloton produced about 37 per cent of Affirm's revenue during the period, creating the risk its business could be adversely affected by the loss of any of those partners, according to the filing.

More than 6,500 merchants use Affirm's platform, according to its prospectus.

Lightspeed partner Jeremy Liew, an Affirm board member, said that, while the company's success is bolstered by Peloton's for the moment, the business reflects its broad merchant base.

"It's almost like an index with the health of e-commerce," Mr Liew said. "Over time we're going to see other companies do well and they'll become increasingly important for Affirm because they're increasingly important for e-commerce."

Mr Liew added that the IPO was priced to make it attractive for groups that were going to be long-term investors.

Affirm's offering was led by Morgan Stanley, Goldman Sachs Group and Allen & Co. Its shares are trading on the Nasdaq Global Select Market under the symbol AFRM.