Affirm shares rose 42% on Monday to about $ 96, while Amazon rose 2% to $ 3,416.

Investors seem to see trading as a major revenue-generating and lifeline for Affirm, which has growing competition in BNPL.

Competitors are muscular in BNPL mode, including PayPal (PYPL) and Square (SQ). In early August, Square announced a $ 29 billion deal to acquire BNPL’s pioneering Afterpay (AFTPY).

Apple

(AAPL) and

Goldman Sachs

(GS) also plans to integrate a BNPL service called Apple Pay Later, Bloomberg has reported.

Nonetheless, Affirm is now likely to get much more extensive tracking with Amazon and reach scale much faster than previously expected. Amazon handled nearly $ 500 billion in gross merchandise last year through its retail and marketplace channels. If only a small portion of this amount flows through Affirm’s BNPL services, it can increase significant revenue.

A survey of more than 200 Amazon buyers by Mizuho Securities shows that nearly half are likely to use Affirm’s BNPL service.

Mizuhon Dan Dolev estimates that the transaction as a whole will add an additional 20-30% gain to Affirm’s gross product volume.

“Partnering with U.S. online retailer # 1 could launch AFRM into a higher orbit, making the fear of Apple Pay’s competition earlier this summer feel like a long-forgotten bad dream,” wrote Dolev, who raised his price target to $ 110 to $ 76.

Other brokerage firms also rose to their targets. On Monday,

Morgan Stanley

raised its Affirm target from $ 120 to $ 73 and maintained its overweight rating.

Barclays

raised its target from $ 85 to $ 115 and maintained its overweight rating.

BofA Securities is on the rise, although its target now looks old. Analyst Jason Kupferberg raised his target to $ 82 last week and kept Buy before news of the Amazon deal came out.

“We continue to see that AFRM is favorably differentiated among peer groups because it has a wide range of merchant categories, average order values ​​(AOVs) and loan types,” he wrote in a memo.

Barron’s has been on the rise at Affirm and wrote last April that the stock looked good at around $ 70. Shares fell to $ 60, due in part to increasing competition from BNPL and the products of one of Affirm’s largest corporate customers,

Peloton Interactive

(PTON).

However, with the Amazon agreement, Affirm should drastically diversify its revenue base and expand its addressable markets. This can also help a company achieve GAAP profits faster than previously expected.

The $ 96 share no longer looks cheap and is priced at 17 estimated sales in 2022.

Collaboration with Amazon may require a greater multiple, as Affirm’s growth appears more likely to be locked into an e-commerce reseller. However, investors may have to wait a while before stocks rise.

Write to Daren Fonda at [email protected]

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