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Affirm stock soars on new deal with Amazon Pay

Affirm Holdings' stock (AFRM) soared on Wednesday after the buy-now-pay-later firm announced a partnership with Amazon (AMZN) Pay.

The deal will allow merchants who use Amazon Pay to offer Affirm's "Adaptive Checkout" which allows customers to pay their bills over time. The technology is already available on Amazon.com and the Amazon mobile app.

Affirm shares soared as much as 20% on the news during Wednesday's trading session.

Buy-now-pay-later has been an increasingly competitive space with the likes of Block (SQ) and Klarna competing with Affirm, PayPal (PYPL), and Apple (AAPL). For its part, Affirm has been dealing with right sizing amid the increasingly competitive landscape. The payment platform cut 19% of its workforce in February and recently saw shares trade-off after losses continued to pile up in its most recent earnings report.

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"Although currently difficult to quantify, we contend integration of Adaptive Checkout into Amazon's digital wallet will boost visibility, merchant and consumer adoption," Truist analyst Andrew Jeffrey wrote in a note to clients on Wednesday. "Apple maintains significant competitive advantage, in our view, owing to its native iPhone integration, but Amazon's leading eCommerce share and growing digital wallet push are integral to Affirm's eCommerce growth."

As Jeffery points out, Apple's push into buy-now-pay later has weighed on shares of Affirm and another popular payment play, PayPal. Affirm stock had been down about 35% over the last year, and down about 80% since its January 2021 initial public offering.

At the JPMorgan Global Technology Media & Communications Conference on May 23, Affirm CEO Max Levchin argued that the addition of Apple in the space could be a positive because it means BNPL is here to stay.

He said that "if Apple took up, I don't know how many thousands of engineers had to work on this, but it's unlikely it would disappear. Apple does not do things as a flash in a pan modality."

SUN VALLEY, IDAHO - JULY 05: Max Levchin, Founder & CEO of Affirm, Inc., arrives at the Sun Valley Resort for the Allen & Company Sun Valley Conference on July 05, 2022 in Sun Valley, Idaho. The world's most wealthy and powerful businesspeople from the media, finance, and technology will converge at the Sun Valley Resort this week for the exclusive conference. (Photo by Kevin Dietsch/Getty Images)
Max Levchin, Founder & CEO of Affirm, Inc., arrives at the Sun Valley Resort for the Allen & Company Sun Valley Conference on July 05, 2022, in Sun Valley, Idaho. (Photo by Kevin Dietsch/Getty Images) (Kevin Dietsch via Getty Images)

Affirm believes the increased move to digital wallets will benefit its business in the long run.

Merchants using Affirm have reported 60% higher average order values than other payment methods, per the company, which also sees 88% of Affirm purchases are from repeat users. In Wednesday's release Affirm president Libor Michalek projected digital wallets will increase to more than half of worldwide e-commerce transactions by 2025.

Wednesday's announcement is an extension of a partnership with Amazon that stems back to 2021. Affirm also partners with the likes of Shopify (SHOP), Walmart (WMT), and Target (TGT), among others.

The product it's adding to Amazon Pay, Adaptive Checkout, allows customers to adapt their payment plan to their needs. So they can request more time to pay out their bill or to put more down on the front end.

Josh is a reporter for Yahoo Finance.

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