Shares of Buy Now, Pay Later (BNPL) company Affirm (AFRM) surged up to 13% on Tuesday morning following the announcement that the company’s services will be integrated into self-checkout lines at retail giant Walmart (WMT).
Customers can already use Affirm to make installment payments for purchases on walmart.com, as well as at the company’s auto centers, vision centers, and regular checkout lines with a cashier. The expansion of its services into self-checkout lines represents an incremental product update for Affirm, effectively reaching the majority of Walmart shoppers.
The market’s positive response to this update is notable in the context of Affirm’s recent struggles. Around 21% of Affirm’s float is currently being sold short, a much higher percentage than the typical 1% or less for most companies. The stock had previously fallen more than 90% from its late 2021 highs to its lows earlier this year, as concerns over higher interest rates and a potential consumer slowdown weighed on the company’s prospects.
However, recent data suggests a turnaround for BNPL companies like Affirm. On Cyber Monday, utilization of BNPL offerings was up 40% over the previous year, according to Adobe Analytics. This positive trend is reflected in Affirm’s stock performance, which has surged 180% since November 1 and nearly 500% for the year.
The significant increase in Affirm’s stock price following the Walmart announcement highlights the impact of short sellers getting squeezed out of their positions as market sentiment shifts. It also reflects the broader market dynamics at play, signaling a changing direction in investment trends.
In conclusion, while the integration of Affirm’s services into Walmart’s self-checkout lines is a positive development for the company, the stock’s sharp rise and high short interest indicate that these moves are more driven by market positioning than a fundamental shift in the company’s outlook. As the market rapidly evolves, such developments can have widespread implications for various sectors, investment styles, and company sizes.