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This photo, provided by Derek Yarra, shows Affirm’s founder, Max Levchin. Affirm’s stock has lost nearly 80% of its value this year as rising inflation left investors questioning the future of “buy now, pay later.” This week, the company forecast next year’s sales to be worse than analysts had expected, pushing the stock back lower.

NEW YORK – Founded in 2012, Affirm is one of the largest “Buy now, pay later” US Company It is also the only publicly traded US-based company that buys now and pays later.

Affirm’s stock has lost nearly 80% of its value this year as rising inflation left investors questioning the future of “buy now, pay later.” This week, the company forecast next year’s sales to be worse than analysts had expected, pushing the stock back lower.

Founder Max Levchin was part of the team that helped launch PayPal in 1998. Levchin recently spoke to The Associated Press about the health of Affirm’s borrowers and the growing number of competitors. The interview has been edited for length and clarity.

Q: One thing that is notable about your earnings is the increased usage of your product. On average, customers have three loans with you instead of two. Why is this frequency increasing?

A: I think it really shows that we are filling an unmet need and developing customer loyalty. We’re now available at around 60% of ecommerce retailers, as well as Shopify and Amazon. We find that once you use Affirm, you will do it again and again. We assume that this frequency number will continue to rise.

Q: There are some signs that consumers are being financially stressed by inflation. How is this affecting your borrowers?

A: I wouldn’t call it any sort of harbinger of a possible downturn, but it’s not the same kind of smooth sailing as it has been for the last 11 years. We’ve seen some stress (among those with the lowest credit scores) and they’re starting to have a hard time.

Q: So does this affect your ability to make loans?

A: Not at all. We’ve taken a much more conservative approach, but that doesn’t mean we don’t lend. We can estimate a borrower’s cash flow and hypothetically make a loan if the borrower makes a larger down payment, for example. Meanwhile, some of our competitors, who used to be traditionally indifferent to underwriting, are beginning to slam on the brakes. They built a business model where no price was too low and underwrote loans with happy abandon because growth matters. They start tapering their growth really, really aggressively. So we’re trying to take market share from them, underwrite better loans and create a better customer experience.

Q: There have been a few new competitors in the buy-now-pay-later industry, most notably Apple. How is this affecting your business?

A: These new market entries haven’t really impacted us as you can see from our earnings. Even as customers use the service more frequently, there’s plenty of room for growth for everyone.

Copyright 2022 The Associated Press.



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