Affirm (NASDAQ: AFRM) stock has declined by 17.5% over 5 trading days. While company-specific news has been somewhat limited, insider selling appears to have weighed on the stock with a substantial share sale by CEO Max Levchin.
CHONGQING, CHINA – AUGUST 26: In this photo illustration, a person holds a smartphone displaying the logo of Affirm Holdings, Inc. (NASDAQ: AFRM), a leading American financial technology company specializing in buy now, pay later (BNPL) services, with the company’s branding visible in the background on August 26, 2025 in Chongqing, China. (Photo by Cheng Xin/Getty Images)
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Overall, the stock still appears overvalued, which, coupled with a history of sub-par recovery after significant declines, indicates risk. Please consider the following data:
- Size: A $25 Bil company with $3.2 Bil in revenue currently trading at $76.03.
- Fundamentals: Revenue growth of 38.8% over the last 12 months and an operating margin of 10.5%.
- Liquidity: Displays a Debt to Equity ratio of 0.32 and a Cash to Assets ratio of 0.2
- Valuation: Currently trading at a P/E multiple of 476.3 and a P/EBIT multiple of 51.0
- Has returned a median of -24.2% within a year after sharp declines since 2010. See AFRM Dip Buy Analysis.
Although we usually buy dips when the fundamentals are solid – for AFRM, see Buy or Sell AFRM Stock – we remain cautious about falling knives. In particular, it is important to consider if things worsen and AFRM decreases another 20-30% to the $53 range, will we be able to retain the stock? What is the worst-case scenario? We refer to this as downturn resilience.
Below is an in-depth analysis of Affirm (AFRM) downturn resilience – specifically, its performance compared to the market during past crises. It turns out, the stock has performed significantly worse than the S&P 500 index during various economic downturns. We evaluate this based on (a) how much the stock declined and (b) how quickly it bounced back.
Here are the details, but first, a quick overview: AFRM offers a digital and mobile-first commerce platform featuring point-of-sale payment solutions, merchant services, and a consumer app, catering to approximately 29,000 merchants in the U.S. and Canada.
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2022 Inflation Shock
- AFRM stock plummeted 94.7% from a peak of $168.52 on 4 November 2021 to $8.91 on 27 December 2022 compared to a peak-to-trough decline of 25.4% for the S&P 500.
- The stock has not yet recovered to its pre-crisis high.
- The highest price the stock has reached since then is $92.18 on 21 September 2025, and it is currently trading at $76.03.
Inflation shock
Trefis
Concerned that AFRM may decline even further? You might want to explore the Trefis High Quality (HQ) Portfolio, which consists of 30 stocks and has a history of comfortably outperforming its benchmark, including all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices —and has achieved returns exceeding 91% since its inception. What is the reason? Collectively, HQ Portfolio stocks have delivered better returns with lower risk compared to the benchmark index; resulting in a smoother ride, as demonstrated in HQ Portfolio performance metrics.