When it was announced on Tuesday that Apple would compete with Affirm, the company took a beating.
The Apple-Goldman Sachs partnership will gain market share in the “buy now, pay later” business.
The stock of AFRM appears to be starting a long-term downward trend.
Apple (NASDAQ: AAPL) has rekindled its relationship with Goldman Sachs (NYSE: GS) in order to build a “buy now, pay later” platform that would likely compete head-on with Affirm’s so far successful business model, according to a story in Bloomberg on Tuesday. The stock dropped more than 14% in Tuesday’s session, closing at $58.21, down 10.5 percent. At the time of writing, AFRM stock had opened 2.5 percent higher on Wednesday.
Until now, Affirm Holdings has earned a lot of positive press throughout earnings season, as the fast-growing payment installments company has consistently increased sales. Revenue increased by 48 percent between 2019 and 2020, according to analyst estimates, and is expected to increase by another 63 percent this year. Affirm’s “buy now, pay later” payment option is becoming more extensively accepted by Shopify (Nasdaq: SHOP) merchants, which accounts for much of the surge in growth. Goldman’s partnership with Apple dates back several years, when the two collaborated to launch the Apple Card, for which the bank served as the lender.
In June, four of the five sell-side research notes on Affirm recommended that investors “buy.” Analysts have set an average price objective of $76.71 for the company, representing a 24 percent increase from Tuesday’s close. AFRM, on the other hand, has been getting the cold shoulder for quite some time. The stock is down 60% from its high of $146.90 on February 10th, and it has never recovered from the May growth stock sell-off.
As much as I’d like to advise readers to ignore the grim headlines, the chart does not appear to be improving. Despite the fact that AFRM stock has been continuously rising since March, Tuesday’s drop appears to have been predicted. Since mid-June, AFRM stock has been unable to rise beyond $70. Affirm needed to not only break through $70, but also set a new range high above $79.30 to re-start an upward trend. AFRM shattered the 9-day ($65.70), 20-day ($65.88), and 50-day ($61.08) Simple Moving Averages (SMAs) in one fell swoop on Tuesday.
Despite a better market open on Wednesday, the downward trend appears to be set to continue. Bullish newcomers should wait for support at $48.37, since the market has already closed below early June support at $59.46. The RSI is currently at 39, indicating that there is room for further negative pressure this week and next. The AAPL/GS collaboration is likely to cast a black cloud over AFRM stock until the next earnings call.
AFRM’s daily graph/n
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