113% Before 10 AM

Hey there, bargain hunter. Tonight Affirm drops its FQ1 2027 shareholder letter after the close, with the conference call kicking off at 5:00pm ET. Wall Street is expecting $0.38 a share on roughly $1.21 billion of revenue. You already know the top-line story. The only story that counts right now is credit.

Scoreboard

AFRM closed Monday at $71.97, with a trailing P/E around 13 and a 52-week range of $42.10 to $90.44. The incoming quarter is the first read on whether management’s fiscal 2027 framework still holds in a weakening spending backdrop.

What Actually Happened Last Quarter

In FQ4 2026, GMV hit $14.1 billion, up 36% year-over-year. Total revenue grew 33% to $1.166 billion. Those are real numbers. But the market is not paying about 13x earnings for a company growing revenue at 33%. It is paying that multiple because it has questions about what happens to those loans when consumers feel this stretched.

The Real Reason There Is a Discount

Consumer confidence sank in September, with the Conference Board’s index dropping 6.7 points to 81.9. But that is a macro mood gauge, not a loan-level answer. Affirm lends to consumers. When consumers feel broke, the first question is whether they are paying back what they borrowed.

Deep Dive: How Affirm Makes Money

Affirm sits between merchants who want to sell things and consumers who want to buy them. It underwrites the loan, earns interest on interest-bearing products, earns network fees, then either holds the loan or sells it to funding partners. The business only works if two things stay true: consumers repay, and funding partners keep buying.

At the end of FQ3 2026, funding capacity stood at $28.2 billion, enough to support more than $65 billion in annual GMV. By the end of FQ4 2026, funding capacity increased to $30.0 billion, which the company estimated could support more than $70 billion in annual GMV. The funding rail is intact. The credit book is the open question.

Affirm’s funding rail depends on partners who are themselves navigating a stressed lending environment. Private credit funding partners are showing early signs of stress that could tighten the capital available to consumer lenders.

The Data That Matters Tonight

• 30-plus-day delinquencies on monthly installment loans, excluding Peloton and Pay in X, were 2.8% in FQ3 2026, up 29 basis points year-over-year and 7 basis points quarter-over-quarter.
• In FQ4 2026, that 30-day rate improved to 2.5%, down 26 basis points quarter-over-quarter.
• The allowance for credit losses as a percent of loans held for investment was 6.0% in FQ3 2026.
• In FQ4 2026, the allowance for credit losses as a percent of loans held for investment was 5.9%.
• Provision for credit losses rose 29% to $797 million for the full fiscal year ended June 30, 2026.
• The consensus estimate for FQ1 2027 is about $0.38 a share on about $1.21 billion of revenue.
• Management’s outlook for FQ1 2027 included an adjusted operating margin of 28% to 30%.

Is It Cheap?

The discount is real. Whether it is a bargain depends entirely on whether tonight’s delinquency update holds near the FQ4 level. If the allowance ratio climbs again, the market will read it as the credit book lagging growth. That is the number that can move this stock tonight.

Bull / Base / Bear

Bull: Delinquencies stay flat or improve. Affirm’s selective underwriting holds up better than broader consumer credit. CEO Max Levchin has repeatedly argued the company underwrites selectively and has not seen meaningful deterioration. If that holds, the current multiple looks wrong.

Base: Delinquencies drift modestly higher, revenue beats narrowly, guidance is maintained. Stock trades sideways. Bargain hunters wait for the next quarter.

Bear: The allowance ratio jumps meaningfully above the recent range, management signals tighter underwriting ahead, and GMV growth decelerates into the high 20s. Funding partners get nervous. The discount becomes a warning.

Action Plan

Do not buy ahead of the report. The 5pm ET call is where the delinquency numbers get stress-tested in real time. Watch the allowance for credit losses ratio first, the 30-plus-day rate second, and guidance for FQ2 GMV third. If all three hold or improve, the entry at current prices is defensible in small size. If the allowance jumps, let the stock react and reassess in 48 hours.

Cheap Investor Checklist

• 30-plus-day delinquency rate: hold near 2.5% (FQ4 baseline)
• Allowance for credit losses as % of loans: watch for acceleration above the recent range
• Revenue vs. consensus: $1.21 billion is the bar
• Adjusted operating margin: 28% to 30% range is the stated target for FQ1
• GMV growth rate: needs to stay strong to support the full-year framework
• Funding capacity: watch for any pullback from the $30.0 billion level reported at FQ4
• FQ2 2027 guidance: does management maintain or trim?

Bottom Line

If delinquencies hold near 2.5% and the allowance ratio stays steady, Affirm at about 13x trailing earnings can look cheap for a business still growing this fast. If the credit book is quietly absorbing stress that the macro mood data hints at, the discount is there for a reason. Tonight’s letter helps answer that question. Read the credit slides before you read anything else.