Is it time to invest in Affirm shares as stock spikes 16% on Target partnership?

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on Oct 6, 2021
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On Wednesday, Affirm Holdings Inc. (NASDAQ:AFRM) shares soared 16% after Target Corp (NYSE:TGT) announced a partnership with the payments company to allow its customers to pay for purchases in instalments.

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Target is partnering with the Buy Now, Pay Later company in conjunction with Sezzle in a bid to prepare for the holiday shopping season. The retailer is teaming up with emerging fintech companies to make shopping experiences more flexible and personalized to customer needs.

Affirm Holdings shares are now up nearly 160% since 8th May. The stock has completed an upward swing to profits after plummeting at the beginning of the year. Its instalment payments features are gaining the attention of retailers and online payments platforms, thereby boosting the stock price.

Affirm looks steeply valued

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From a valuation perspective, Affirm shares trade at a steep price-sales ratio of 39.25, making the stock too expensive for value investors. Moreover, analysts expect its earnings per share to plummet by 208% this year, before bouncing by 37.80% next year.

As a result, short-term growth investors might also opt for alternatives in the market. However, given the company’s long-term growth prospects amid the increasing adoption of its BNPL system, Affirm presents an exciting long-term growth opportunity. 

Therefore, investors willing to overlook the short-term turbulence could find it difficult to pass the opportunity to buy the stock.

Source – TradingView

A retest of YTD highs?

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Technically, Affirm shares appear to be trading within an ascending channel formation in the intraday chart. As a result, the stock has rallied closer to current year-to-date highs, creating an exciting opportunity for short-term buyers.

Moreover, with shares yet to reach the overbought conditions of the 14-day RSI, the current bull-run could continue. 

Therefore, investors could target extended short-term gains at $137.71, or higher at $146.93. On the other hand, $120.31 and $108.87 are the support zones.

It may not be too late to buy AFRM

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In summary, although Affirm Holdings shares are up nearly 160% since 8th May, the stock is yet to reach overbought conditions, leaving room for more upward movement.

Therefore, it could be time to buy before the stock retest this year’s highs.

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