Affirm CFO amid stock slump: ‘I wouldn’t bet against the American consumer’
Affirm's stock may have been hit particularly hard by recession fears, but an exec at the consumer startup isn't giving in to the doom and gloom just yet.
“I wouldn’t bet against the American consumer,” Affirm (AFRM) CFO Michael Linford told Yahoo Finance Live (video above). “What we see right now is a really robust consumer … we don’t see any weaknesses with the consumer right now.”
Affirm is one of the biggest buy now, pay later (BNPL) players in the U.S. BNPL allows users to split transactions into multiple installments. The company offers the service to a variety of big-name retailers including Amazon, Target, Walmart, and American Airlines.
Given Affirm's exposure to an economic slowdown, the stock fell sharply ahead of the company's earnings before recovering modestly after the results were reported Thursday. The stock closed at $22.95 after Monday's trading session.
Linford reiterated that the consumer was strong in the most recent quarter and noted that the company “saw real growth in categories like travel and ticketing.”
However, some data on how consumers are feeling are starting to tell a different story: Last week, a University of Michigan survey revealed that consumer sentiment among Americans has slumped to its lowest level in nearly 11 years in early May. Concerns over gas prices and the stock market seem to be looming large in consumers' minds, the survey found.
Goldman Sachs economists stressed that actual spending habits are likely to converge with sentiment, as reported by Yahoo Finance.
"Alternative data indicate a slowdown in consumer spending in late April and early May — perhaps in response to tighter financial conditions and higher consumer prices," Goldman Sachs chief economist Jan Hatzius stated in a note. "The 10-year low in consumer sentiment in early May suggests some of this weakness could continue in late May and possibly June."
Hatzius added that despite $2.5 trillion in excess savings, “solid job gains,” and a continuation of wage growth, which might seem like tailwinds for consumption growth, “we are assuming a deceleration in services spending in May and June and an outright decline in retail spending in May."
Nonetheless, as financial blogger Sam Ro noted recently, consumers often don’t do as they say as spending habits contradict their sentiments reported in surveys.
"People are shopping relentlessly," Ro recently told Yahoo Finance Live, even as inflation has ratcheted up in the last six to nine months. “There doesn’t seem to be a whole lot of indication that people are pulling back on spending.”
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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
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