The checkout wars, Affirm's surprise, and the brutal reality of consumer credit
I have spent the better part of the last two years listening to doomsayers declare the absolute death of buy now pay later. To hear the City tell it, the moment interest rates crept up, consumers would default en masse. It was a nice, tidy narrative. Then Affirm dropped its latest earnings report, and completely ruined the bears' weekend.
Revenue and gross merchandise volume both cleared Wall Street estimates with room to spare. Management did not stop there, boldly raising their forward guidance instead of offering the usual corporate platitudes.
In 2023, the instalment lending sector felt like a desolate wasteland. Now, one confident forecast changes everything.
This is a fascinating pivot, but it does not mean the sector is suddenly bulletproof.
When companies scrape past estimates but stay cautious, markets punish them. Affirm chose the opposite route. Their leadership clearly sees durable momentum, suggesting borrowers are still enthusiastically tapping into instalment products. Even while household budgets ache from the relentless cost of living, consumers are making it work. To me, this implies buy now pay later is quietly stealing serious wallet share from traditional, ossified credit cards.
