Striving to understand Affirm’s IPO pricing hopes – TechCrunch
How much income does it take to get an eleven-digit estimate?
The news broke last night that To affirm, a well-known fintech unicorn, could approach public markets with a valuation of $ 5-10 billion. The Wall Street Journal, who made the headlines, said Affirm could start trading this year and that its IPO options include launching through a special purpose acquisition company, also known as PSPC.
This Affirm considers the listing to be no surprise. The company is about eight years and a raised north of $ 1 billion, which means that it has blocked investor cash during its life as a private company. And liquidity has become an increasingly attractive possibility in 2020, when new offerings of all levels of quality have a strong reception from investors and traders who crave equity in growing companies.
But $ 10 billion? This price is a multiple of what Affirm was worth last year when it $ 300 million more to his chest at a price after the change of $ 2.9 billion. There were rumors that the company was chasing a much bigger round later in 2019, although it does not appear – by PitchBook records – that Affirm has raised more capital since its F series.
This morning, let’s talk about the possible valuation of the company on the stock market. The Journal noted the good public performance of Afterpay as a possible related party for Affirm – the Australian immediate buyback and later payout firm has seen its value drop to $ 8.01 per share in the past year before soaring to around $ 68 today. But given the company’s reporting cycle, it’s a difficult business to use as a comp.
Fortunately, we have another option to build on that is rated nationally, which means it has more regular and recent financial disclosures. So let’s see how much revenue it takes to get an eleven-digit valuation in public markets by offering credit to consumers.
Affirm consumer loans with point-of-sale funds that are repaid on a schedule at a certain cost of capital. Affirm customers can select different repayment periods, increase or decrease their regular payments and the total cost of interest.
Synchrony offers similar installment loans to consumers, as well as other forms of access to capital, including private label credit cards. (Verizon, the parent company of TechCrunch, Recently offered a card to the companyI should note.) Synchrony is worth $ 13.5 billion this morning, making it a similar value company compared to the higher end of the Affirm possible valuation range.