Affirm stock (AFRM) has gained an impressive 150% over the last six months and has outperformed the broader market by a wide margin over the period. Life has come full circle for Affirm, which crashed 90% in 2022 only to rise five-fold in the next year. The stock continued its rally into 2024 and is outperforming the market in the year to date. 

However, despite its share price outperformance since 2023, AFRM still trades at less than half its all-time high of $168.52, set in November 2021. In this article, we’ll analyze whether AFRM stock is a buy or a sell after its breathtaking rally over the last six months.

Decoding the Rally in AFRM Stock

While a lot of high-flying companies that went public during the boom between 2020 and 2021 have faltered or worse, gone out of business, Affirm has been a story of solid execution, strong growth, and delivery on forecasts, including in the most recent quarter where it reached breakeven on operating profits.

The company exceeded its guidance on all metrics during the second quarter of its fiscal 2025 and it is no wonder the stock rallied after the report. In its shareholder letter, Affirm perhaps best summed up what’s been fueling the stock’s rally, saying “Challenges met, competitors bested: excellent growth in a rapidly- expanding segment, on-target unit economics, robust operating leverage.”

What Has Been Driving Affirm’s Growth

Affirm’s growth has been fueled by the multiple partnerships that it has either signed up or expanded on. In 2021, it partnered with Amazon (AMZN) to bring its buy now, pay later (BNPL) solutions to the company’s e-commerce platform and there has been no looking back since then.

Affirm has partnered with leading companies like Walmart (WMT), Apple (AAPL), Shopify (SHOP), and GoodRx (GDRX) which puts it in a good position to capture consumers’ growing adoption of BNPL. Affirm has been expanding partnerships with existing partners and on Feb. 20, it took its partnership with Shopify global – including it becoming the exclusive partner in Canada.

The company has been expanding globally and has launched in the U.K. too. These international expansions should help keep Affirm’s top-line growth buoyed. Affirm has also doubled down on “0% loans” wherein either the manufacturer or the merchant agrees to part with some of their margins to provide the goods at 0% interest rates to buyers. These loans help spur purchases and as Affirm’s CEO Max Levchin said during the fiscal Q2 2025 earnings call, are “a compelling reason for someone to pull the trigger on buying.”

Affirm also managed delinquencies well, despite higher interest rates and the macroeconomic slowdown. Notably, higher interest rates were a key headwind for Affirm as it raised its borrowing costs. However, the company managed to turn the corner on profitability despite multi-decade high interest rates in the U.S.

AFRM Stock Forecast: Analysts Turn Bullish

Almost 58% of the analysts actively covering Affirm rate the stock as a “Strong Buy” while the corresponding number three months back was just above 47%. Importantly, no analysts rate AFRM as a “Sell” or some equivalent.

Analysts have gradually revised Affirm’s target price but its current mean target price of $74 is slightly lower than the Feb. 20 closing price. The Street-high target price of $90 is however over 20% higher.

Is Affirm Stock a Buy or a Sell?

To be sure, Affirm has been among the credible growth companies that have delivered on top-line growth without losing sight of the bottom line. The company expects to post a GAAP profit by the end of this fiscal year and was profitable in fiscal Q2 as well. Analysts are modeling a 22.8% rise in Affirm’s revenues in the next fiscal year while predicting its per-share earnings at $0.62. 

However, the stock’s valuations don’t seem comfortable at current levels, and the next 12-month (NTM) price-sales multiple of 6.7x looks on the higher side. While I continue to hold some Affirm shares, I capitalized on the recent rally to exit some of my positions. 

In the short term, there are several risks Affirm investors should watch out for. These include potentially higher inflation amid President Donald Trump’s trade and immigration policies, interest rates staying higher for longer, and a slowdown in consumer spending as was evident in Walmart's soft guidance.

While I find Affirm a good long-term growth story, the price is just not right to bet on this BNPL name for the short term. As Howard Marks’ famous quote goes, “It's not what you buy, it's what you pay.”