What Happened?
Shares of buy now, pay later company Affirm (NASDAQ:AFRM) fell 6.2% in the afternoon session after market volatility spiked as President Donald Trump proposed a one-year 10% cap on credit card interest rates.
The stock initially jumped in early trading on the news. The thinking was that a cap on traditional credit cards could drive more consumers to buy-now-pay-later firms like Affirm. However, the gains were given back as the initial positive reaction faded. Investor sentiment shifted sharply amid uncertainty about the regulatory impacts and whether the proposal would ever become law. The sell-off was not limited to Affirm, as other companies in the buy-now-pay-later sector also saw their shares decline.
The shares closed the day at $76.49, down 6.5% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Affirm? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Affirm’s shares are extremely volatile and have had 52 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 12.7% on the news that it reported stellar second-quarter results that surpassed Wall Street's expectations and swung to a profit.
For the quarter, the company announced revenue of $876.4 million, a 33% year-over-year increase that beat analyst estimates. Affirm also posted a GAAP profit of $0.20 per share, a significant turnaround from the loss of $0.14 per share recorded in the same quarter last year and well ahead of Wall Street's expectations. Adding to the positive sentiment, management provided an upbeat revenue forecast for the upcoming third quarter, with its guidance of $870 million at the midpoint topping analyst projections.
Affirm is up 3.1% since the beginning of the year, but at $76.33 per share, it is still trading 17.2% below its 52-week high of $92.18 from September 2025. Investors who bought $1,000 worth of Affirm’s shares 5 years ago would now be looking at an investment worth $784.91.
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