Affirm assets (NASDAQ:AFRM) just entered into a record $4 billion partnership with private credit heavyweight Sixth Street, sending its stock up 4% on the news. The three-year deal, the largest in Affirm’s history, paves the way for the BNPL leader to deploy more than $20 billion in loans. Sixth Street’s capital will flow back into Affirm’s loan pool as consumers repay, creating a revolving credit engine ready to power short-term installment loans from giants like Amazon and Apple. Translation? Affirm isn’t just keeping pace with fintech, it’s breaking away from the pack.
It’s not just about money; It’s about dominance. Affirm’s gross merchandise value and operating profits outperform competitors like Klarna and Afterpay (AFTPF), with Bank of America analysts recently giving the stock a “Buy” rating. They are betting big on Affirm’s ability to scale its payments network while monitoring credit metrics. As private credit booms, alternative asset managers like Sixth Street are turning to fintech for its ability to offer flexible and scalable financing, exactly what Affirm’s forward flow agreements offer. The move positions Affirm perfectly to ride the wave of growing consumer demand for BNPL.
Here’s why it matters: Affirm has already increased its funding capacity by 130% over the past three years, and this partnership just upped the ante. The fintech space is fiercePayPal (NASDAQ:PYPL) reinvents itself, Block grows, but Affirm quietly leads the charge. With a delinquency rate of just 2.8% and consistent revenue growth, this $4 billion partnership isn’t just a win, it’s a statement. Investors, take note: Affirm is playing for the long term and playing to win.
This article first appeared on GuruFocus.