Affirm's stock may have been hit particularly hard by recession fears, but an exec at the consumer startup isn't giving in to the doom and gloom just yet.
I wouldn't bet against the American consumer, Affirm AFRM CFO Michael Linford told Yahoo Finance Live video above. What we see right now is a really robust consumer, we don't see any weaknesses with the consumer right now. Pay later BNPL players in the US BNPL allows users to split transactions into multiple installments, which is one of the biggest buys. The company offers the service to a variety of big-name retailers including Amazon, Target, Walmart, and American Airlines.
Affirm's exposure to an economic slowdown made the stock fall sharply ahead of the company's earnings before recovering modestly after the results were reported Thursday. The stock closed at $22.95 after Monday's trading session.
The consumer was strong in the most recent quarter, and Linford said that the company saw real growth in categories like travel and ticketing. Consumer sentiment among Americans has dropped to its lowest level in nearly 11 years in nearly 11 years, according to a survey by the University of Michigan last week. The survey found that concerns over gas prices and the stock market seem to be looming large in consumers' minds.
As reported by Yahoo Finance, Goldman Sachs economists stressed that actual spending habits are likely to converge with sentiment.
There is a slowdown in consumer spending in late April and early May, perhaps due to tighter financial conditions and higher consumer prices, as stated by Goldman Sachs chief economist Jan Hatzius in a note. The 10 year low in consumer sentiment in early May suggests that the weakness could continue into late May and possibly June. Hatzius said that despite $2.5 trillion in excess savings, solid job gains and a continuation of wage growth, which may seem like tailwinds for consumption growth, we are assuming a deceleration in services spending in May and June and an outright decline in retail spending in May. As a financial blogger, Sam Ro noted recently, consumers often don't do as they say, as spending habits contradict their sentiments reported in surveys.
Inflation has ratcheted up in the last six to nine months, and people are shopping relentlessly, according to a recent interview with Yahoo Finance Live. There doesn't seem to be a lot of indication that people are pulling back on spending. She can be reached at aarthiyahoofinance.com. Follow her on Twitter at aarthiswami.