Shares of Affirm Holdings (AFRM) are rallying in today’s trading after the lender partnered with private credit giant Sixth Street in a $4 billion financing deal that marks its biggest funding arrangement to date. The agreement allows Sixth Street to purchase Affirm’s short-term installment loans over three years and gives Affirm the flexibility to issue more than $20 billion in loans. As demand for buy now, pay later (BNPL) services grows, Affirm is tapping into private credit to scale its lending without relying solely on traditional banks or public bond markets, which can be unstable during times of economic uncertainty.
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This partnership is part of a larger trend for private credit firms as they expand beyond corporate debt into consumer lending and auto loans. For firms like Sixth Street, deals like this open up new markets and attract investors looking for alternatives to conventional debt investments. At the same time, fintech companies like Affirm benefit from a steady, flexible source of funding to meet increasing customer demand.
Indeed, Affirm’s funding capacity has surged 130% over the past three years to $16.8 billion as of September. The company has been actively diversifying its funding sources. An example of this is a recent $500 million deal with Prudential Financial (PRU). Thanks to private credit, Affirm can continue expanding its BNPL services and strengthen its position in the market as consumer lending trends shift.
BTIG Raises AFRM Price Target
Separately, BTIG analyst Vincent Caintic recently raised Affirm’s (AFRM) price target from $68 to $81 per share while maintaining a Buy rating. The firm expects fintechs will dominate discussions in 2025, with Affirm’s near-term growth driven by strong volume and improving operating income margins as the business scales.
However, Caintic cautions that much of the demand relies on private credit funds, which could pull back if consumer credit performance worsens. BTIG also highlights concerns that fintechs are loosening credit standards to meet investor appetite for consumer loans, and that could potentially lead to weaker results in upcoming quarters.
Is Affirm Holdings a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AFRM stock based on eight Buys, nine Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 41% rally in its share price over the past year, the average AFRM price target of $61.14 per share implies 13.1% downside risk.
