Daily Stock Pick: October 4th, 2021

Stocks were lower this morning as uncertainty on the debt ceiling and inflation concerns weighed heavily on investor sentiment.  October has a reputation for volatility, and we may see that play out in the days to come.  However, many market strategists expect stocks to reclaim their footing and eclipse their record highs once uncertainty subsides.  

At the start of the first full week of October trading, the Dow was more than 3.6% away from its August 16th record close.  The S&P 500 was nearly 4% lower than its September 2nd record close.  The Nasdaq has lost more than 5.2% since its September 7th record close.  We’ll have to wait and see how the week plays out.  

In today’s stock pick, we’ll take a look at a quickly evolving industry and one company within it that, through its unique approach for expansion, is rapidly establishing itself as a stand-out among peers.    

Affirm (AFRM) made its debut onto public markets earlier this year in one of the most talked-about IPO’s in history.  Affirm priced its shares above the target range at $49 a piece.  The stock soared 95% to close its first day of trading at around $97.  The stock price surged to an all-time high of $146.90 in February before the broad sell-off in tech stocks combined with an earnings miss caused the stock to tumble to the mid-$40s in May.  But over the past few months, Affirm stock has rebounded and seems to have finally found its footing.  The stock looks ready to continue its way up with help from management in the form of strategic partnerships.  

Rather than targeting individual e-commerce businesses one by one, Affirm set its sights on gaining access to the enormous power offered by two of the most prominent digital retailers on the planet.  The company recently signed blockbuster deals with Amazon (AMZN) and Shopify (SHOP) that will place it at the checkout for countless consumer purchases.   

To put it into context, Affirm currently has slightly more than 7 million customers.  Shopify has a user base of 118 million, and Amazon has a user base of 200 million.  Shopify and Amazon, therefore, present an opportunity for Affirm to grow its customer base by 4,470%.

The company’s guidance (which excludes the Amazon deal) calls for $1.175 billion in revenue for fiscal 2022, implying a growth rate of 35% and prompting analysts to increase their forecasts.  The current consensus among analysts is to Buy AFRM.  There are 6 Buy ratings, 4 Hold ratings, and 1 Sell rating for the stock.  

Where to invest $1,000 right now...

Before you consider buying Affirm, you'll want to see this.

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And it's not Affirm.

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Wondering what stock he's investing in?

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Click here to find out the name and ticker of Whitney Tilson's no. 1 pick for 2021...