Mizuho: Apple-Affirm Partnership Could Boost Gross Merchandise Volume by 35%
Mizuho, a global financial services firm, recently conducted an analysis on the collaboration between Affirm Holdings, Inc. and Apple Pay. Their findings suggest that this partnership could lead to an incremental Buy Now, Pay Later (BNPL) opportunity worth around $12 billion for Affirm. This growth represents a potential increase of 35% compared to the fiscal year 2025 consensus volume estimates.
Stock Surge Justified?
The analysis indicates that the recent rise in Affirm's stock price following the Apple Pay partnership announcement is likely justified. This is because the potential benefits from the deal are still not fully reflected in the stock.
E-commerce Payment Volume Insights
Analysts estimate that Apple Pay accounts for about $265 billion of e-commerce payment volumes in the US. This estimation is backed by a recent Worldpay report, which noted that Digital Wallets had a collective volume of around $750 billion in the US in 2023. The key digital wallets included in the report were PayPal, Google Pay, and Apple Pay.
Breaking Down the Numbers
After subtracting an estimate for PayPal US Branded Checkout TPV, Mizuho calculated that the remaining $450 billion in volumes were split between Apple Pay and Google Pay. Utilizing the US iPhone/Android mix ratio of 60/40 as a proxy, they inferred that Apple Pay contributed around $265 billion to the e-commerce volumes.
Potential BNPL Growth
With Worldpay estimating the BNPL mix at around 5%, Mizuho projects a potential opportunity of converted Apple Pay volumes worth about $12 billion. This could translate to a 35% increase in Affirm's projected FY25 Gross Merchandise Volume (GMV).
Investment Ratings and Targets
Mizuho maintains a 'Buy' rating for Affirm, with a price target set at $65.
This strategic partnership between Apple Pay and Affirm holds considerable promise for expanding BNPL opportunities and strengthening their market positions.
By breaking down the complex financials into these key findings and potential growth figures, one can easily grasp why this collaboration is a significant development for both companies.
