Shares of Affirm (NASDAQ:AFRM) experienced an uptick in premarket trading today following an upgrade by Jefferies.

Jefferies analysts raised Affirm’s rating to Hold from Underperform, highlighting the recent evidence of stabilizing credit risk, which they believe underscores the structural advantages of Affirm’s product positioning.

The analysts also noted that the growth in adoption rates for “buy now, pay later” services is partly driven by current inflationary and macroeconomic factors. Affirm’s business model allows customers to purchase items and defer payment, usually without incurring interest charges. This flexible payment option has become increasingly popular with online consumers. However, the Consumer Financial Protection Bureau has issued warnings about the potential risks for these borrowers, such as higher debt loads or a propensity for credit card delinquencies.

Additionally, this week’s Cyber Monday spending reached record levels, partly attributed to the widespread use of the “buy now, pay later” option by retailers.

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