Affirm late Tuesday priced an offering of 24.6 million Class A shares at $49 each, above the recently increased target range of $41 to $44 a share. The original range was $33 to $38.
The IPO price values the company above $12 billion, once accounting for all outstanding shares and stock options.
Affirm had revenue for the June 2020 fiscal year of $509.5 million, up 93% from a year ago, while losing $112.6 million. For the September quarter, revenue was $174 million, up about 98% from the comparable year earlier period, with a loss of $15.3 million.
Affirm’s strong growth, and its role as a provider of consumer financial services to a wide range of popular consumer retailers, has made the IPO a hot deal. About 30% of the company’s revenues come from the connected stationary bike company Peloton Interactive (PTON). Other customers include Walmart, Nordstrom, TheRealReal, Eddie Bauer, Expedia, Eventbrite, Bonobos and Purple, among others.
After the offering, the consumer finance company will have about 246.4 million total shares outstanding, assuming exercise of the “green shoe” provision of the deal, with the shares about equally split among class A and supervoting Class B shares. (Class B shares are 15 votes each, but automatically convert to Class A shares on the seventh anniversary of the completion of the IPO.) Throw in various groups of stock options and restricted stock options, and the fully diluted share count balloons to about 318 million shares. At the IPO price, the company is valued at $12.1 billion, or about $15.6 billion on a fully diluted basis.
Founder and CEO Max Levchin will have 19.8% voting power in Affirm after the offering (not fully diluted), with a stake worth $1.4 billion. The e-commerce platform company Shopify (SHOP) holds about 8% of the company, a stake worth just shy of $1 billion. Venture firms with stakes of between 5% and 10% each include Jasmine Ventures, Lightspeed, Khosla Ventures, and Founders Funds.
Payment services companies like Square (SQ) and PayPal (PYPL) trade in the neighborhood of 8 to 10 times 2021 revenue estimates, but aren’t growing as fast as Affirm. If the company can keep growing at rates close to 100%, it would have revenue of $1 billion for the June 2021 fiscal year and close to $2 billion in fiscal 2022. If that happens, the valuation could approach $20 billion, based on peer multiples. We’ll find out how optimistic investors are when the stock starts trading on Wednesday.
The offering is led by Morgan Stanley, Goldman Sachs, and Allen & Co. Affirm will trade on Nasdaq under the symbol AFRM.
Write to Eric J. Savitz at eric.savitz@barrons.com
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January 13, 2021 at 09:08AM
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Affirm IPO Prices at $49 a Share - Barron's
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