Affirm Stock Plummets 38% YTD: A Contrarian Play Among Cheap Stocks for Options Trading

The fintech sector has been battered in 2024, with Affirm Holdings, Inc. (AFRM) leading the decline. The buy-now-pay-later pioneer has shed 38.3% of its value year-to-date, significantly underperforming both the broader market—where the S&P 500 dropped 14.1%—and its industry peers, which fell 7.1% on average. Even digital payments heavyweight PayPal Holdings, Inc. (PYPL) suffered a 31.4% loss. By contrast, payment infrastructure stalwarts Visa Inc. (V) and Mastercard Incorporated (MA) showed more resilience, declining just 1.2% and 7.8% respectively.

The stock now trades 54.5% below its 52-week peak of $82.53, making AFRM one of the cheapest stocks in the fintech space—and a compelling opportunity for contrarian investors and options traders seeking oversold assets with recovery potential.

What Triggered the Selloff?

Multiple headwinds converged to hammer AFRM’s valuation. Recession anxiety, persistent inflation concerns, and fears about consumer debt repayment sent investors fleeing the BNPL sector. The competitive landscape shifted when Klarna, Affirm’s most aggressive rival, forged a partnership with a Walmart-backed financial platform, fueling investor concerns about market share erosion and growth deceleration.

However, closer examination reveals the damage may be overstated. According to COO Michael Linford, Walmart represented only 5% of AFRM’s gross merchandise volume and just 2% of adjusted operating income in the second half of 2024. This modest exposure shielded Affirm from agreeing to economically unfavorable terms—a sign of disciplined capital allocation.

Klarna’s IPO Pause Relieves Near-Term Pressure

A Wall Street Journal report revealed that Klarna has shelved its IPO ambitions amid the broader tech downturn and tariff uncertainties. This development unexpectedly favors Affirm.

Without Klarna raising fresh capital through a public offering, the BNPL competitive landscape becomes less frenzied. Klarna will face tighter capital constraints, while market attention may rotate toward established public players like Affirm. For options traders seeking cheap stocks with near-term catalysts, this shift in momentum is noteworthy.

Fundamental Growth Drivers Remain Intact

Beyond the noise, Affirm’s strategic positioning strengthens on multiple fronts.

International Expansion: The company has already planted flags in Canada and launched in the U.K. last November, using it as a beachhead for deeper European penetration. With PayPal entrenched across Europe, AFRM’s existing regional partnerships position it for potentially faster and smoother market capture. This geographic diversification addresses concerns about U.S.-centric growth saturation.

Product Innovation Beyond BNPL: Affirm is moving beyond point-of-sale installment payments. The company is developing debit products and banking integrations to embed its services into everyday consumer spending—from high-ticket purchases to routine transactions. This positions Affirm to compete more directly with Visa and Mastercard, while simultaneously broadening revenue streams and expanding total addressable market.

Shift to Sustainable Growth: Management has embraced a profitability-first philosophy, tightening underwriting standards, optimizing operations, and improving unit economics. AFRM achieved GAAP profitability in its most recent quarter and expects to maintain that through Q4 of fiscal 2025. For investors concerned about burn rates and path to profitability, this represents a material de-risking.

Valuation Metrics Suggest Significant Upside

Current trading multiples tell a compelling story. AFRM trades at 3.17X forward 12-month sales, well below its three-year median of 3.50X and significantly cheaper than its 5.97X industry average. Compare this to PayPal (1.73X), Visa (13.92X), and Mastercard (13.57X), and AFRM emerges as a rare discount in high-quality fintech assets.

Earnings Trajectory Points to Recovery

The consensus view reflects confidence in AFRM’s turnaround narrative. Fiscal 2025 earnings are expected to improve 94% year-over-year, with fiscal 2026 earnings surging 704.3%. Revenue growth projections stand at 36.9% for fiscal 2025 and 24% for fiscal 2026.

Affirm has backed these projections with results, beating earnings expectations in four consecutive quarters with an average surprise of 84.1%. For options traders hunting cheap stocks with positive momentum, this track record of execution matters.

The Investment Case: Opportunity in Oversold Territory

Affirm’s 38% decline looks catastrophic on price charts but represents a genuine inflection point. The company has moved past growth-at-any-cost posturing and embraced sustainable, profitable expansion. International markets await, product diversification is underway, and valuation multiples offer room to expand.

With a Zacks Rank #1 (Strong Buy) backing, AFRM presents an attractive entry for value-oriented investors and a compelling cheap stock candidate for options traders seeking asymmetric risk-reward exposure in the fintech sector.

The sharp markdown has reset expectations. For disciplined investors, it has also reset opportunity.