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Affirm Public S-1 Filing

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Re: Affirm Public S-1 Filing

#41

Post by bytematic »

john_moscow wrote: post #22
newguy1234 wrote: post #10

Earlier quoted context omitted.

I don't see it as a problem. Innovation is accelerating with new business models and so on. Adoption curve for new technologies could be occurring quicker as well thanks to social media (easier to "spread the word" about new products/services/technologies). I don't see it as a problem because all of these companies have legitimate products/services, legitimate customers and legitimate cash flows. This isn't another d…

From a quick glimpse, the business model of Affirm seems to be about letting people get loans for things they would previously have to save for. In other words: Before: Alice wants to buy a chair that costs $100 from Bob. Alice saves $10 a month and buys a chair. Bob got $100. Alice can buy a new chair every 10 months. She may also conclude after 10 months, that she doesn't want the chair that badly, and would instea…

Almost every time (in the last couple years) I've seen pay-over-time it is no extra cost to the customer. It's either $100 or 5 installments of $20.

Re: Affirm Public S-1 Filing

#42

Post by chasebank »

subsubzero wrote: post #14
xoxoy wrote: post #5

Earlier quoted context omitted.

I mean look at the market - we’re at all time highs. It’s more the trillions the Fed pumped into the markets than stimulus.

yeah its probably this, market caps on some of these money losers is stratospheric. I think alot of people forgot the lessons of 2000. Take Palantir, a company that is 11 years old and for the past 3 years has lost 600M a year. What monopoly will this company carve out for itself to achieve this lofty valuation? Or lets look at doordash [1] despite the pandemic and most of its workers not being employees(low paid gig…

I don't know why you're being downvoted. Your probably is probably right. Most people have amnesia.

Re: Affirm Public S-1 Filing

#43

Post by tristor »

112012123 wrote: post #21

Interesting. Overall, I agree with everyone else - Affirm looks like a healthy company. Major takeaways: 1.5% write-off rate for their jan 2020 vintage is very healthy - comparable to the long-term trend for unsecured superprime consumer debt. Given the (I suspect) lower average creditworthiness of Affirm customers, this is a great number. I'd be curious to see their long-term trend for same-age vintages, however. In…

> absent some specific customer segment that has special credit situations

It seems from the S-1 that Affirm has grown it's market quite a lot, but my first and primary exposure to them is in the car scene. Affirm entered this customer segment and dominated pretty quickly as the creditor integration of choice for long time-scale projects with up front costs like custom engine builds. I imagine to some degree they are able to make decisions partly based on the nature of what is being purchased.

Their S-1 indicates this is shifting, but I have historically seen Affirm in places where a more typical online consumer credit organization like PayPal Credit / BillMeLater / etc doesn't play. Affirm seemed to be focused on larger sized purchases which would otherwise be paid on an installment plan, but filling that gap. Exercise equipment like Peloton is a great example, just as engine builds is a similar type of transaction.

Re: Affirm Public S-1 Filing

#44

Post by john_moscow »

kenrose wrote: post #26
john_moscow wrote: post #22

Earlier quoted context omitted.

From a quick glimpse, the business model of Affirm seems to be about letting people get loans for things they would previously have to save for. In other words: Before: Alice wants to buy a chair that costs $100 from Bob. Alice saves $10 a month and buys a chair. Bob got $100. Alice can buy a new chair every 10 months. She may also conclude after 10 months, that she doesn't want the chair that badly, and would instea…

Your description sounds like the definition of financing. Yes, with financing there’s a trade off. In exchange for paying interest, you have the item that much sooner. Slightly tongue-in-cheek, but this is missing in your before example: Alice has to sit on the floor because she doesn’t have a chair. After 10 months of doing this, she has terrible posture and joint pain from sitting on the floor all the time. Despite…

>Yes, with financing there’s a trade off. In exchange for paying interest, you have the item that much sooner.

Except then you want your next item and can't buy it because your credit limit is maxed out. So you have moved your "item queue" forward once or maybe twice, and now have one more rent to pay. You still have to wait for the next item, it's just instead of waiting for your savings to reach $100, you wait for your debt to drop to N - $100 where N is your credit limit.

It makes sense for strategic items, like a house or a car. But doing it on a daily basis is just poor financial planning.

>Alice has to sit on the floor because she doesn’t have a chair.

Motivated Alice should go around garage sales and find a used chair for $5. Or research how to make a makeshift one from whatever she has. Or borrow it from a friend. Or read in a library and eat cheaper food for 2 weeks, and save $100 right away.

All these are problem-solving and prioritization skills, and they are crucial to one's long-term success. And the difference in life quality between America and Zimbabwe is because the previous generations of Americans possessed these skills and applied them wisely. Except now the big players realized that they can make more money off people without these skills, so the popular culture is instead praising impulsive decisions over carefully weighed plans, and pushing people deeper into poverty.

Re: Affirm Public S-1 Filing

#45

Post by john_moscow »

jimjh wrote: post #25
john_moscow wrote: post #22

Earlier quoted context omitted.

From a quick glimpse, the business model of Affirm seems to be about letting people get loans for things they would previously have to save for. In other words: Before: Alice wants to buy a chair that costs $100 from Bob. Alice saves $10 a month and buys a chair. Bob got $100. Alice can buy a new chair every 10 months. She may also conclude after 10 months, that she doesn't want the chair that badly, and would instea…

Didn't follow the leap to "remortgage". Which service allows remortgaging of consumer goods? Don't forget that Alice gets to sit in the chair 10 months sooner, and study for their GMAT or CISSP.

Based on my experience, the skill of persistently studying for your GMAT evening after evening highly correlates with the skill of persistently saving a fraction of your income month after month. Delayed gratification and everything.

So a more realistic scenario is that first she won't study in a library because she doesn't have a chair. Then, having a loan on the chair she won't study because the old phone is too slow. Then, having a loan on both chair and the new iPhone, she won't study it because it's just too hard and going to the pub with the friends is more fun. So she will end up with another loan for a liberal arts degree, and will then wonder how to pay it off from a Starbucks salary.

Sorry, like it or not, people appreciate hard-earned things more than something that comes seemingly for free. The best example is that 70% of lottery winners go bankrupt within the next few years [0].

[0] https://www.washingtonpost.com/outlook/five-myths/five-myths...

Re: Affirm Public S-1 Filing

#46

Post by john_moscow »

bytematic wrote: post #41
john_moscow wrote: post #22

Earlier quoted context omitted.

From a quick glimpse, the business model of Affirm seems to be about letting people get loans for things they would previously have to save for. In other words: Before: Alice wants to buy a chair that costs $100 from Bob. Alice saves $10 a month and buys a chair. Bob got $100. Alice can buy a new chair every 10 months. She may also conclude after 10 months, that she doesn't want the chair that badly, and would instea…

Almost every time (in the last couple years) I've seen pay-over-time it is no extra cost to the customer. It's either $100 or 5 installments of $20.

There's no free money. If you see something like this and are willing to pay in cash, you can usually negotiate a discount.

Re: Affirm Public S-1 Filing

#47

Post by john_moscow »

cosmie wrote: post #30
john_moscow wrote: post #22

Earlier quoted context omitted.

From a quick glimpse, the business model of Affirm seems to be about letting people get loans for things they would previously have to save for. In other words: Before: Alice wants to buy a chair that costs $100 from Bob. Alice saves $10 a month and buys a chair. Bob got $100. Alice can buy a new chair every 10 months. She may also conclude after 10 months, that she doesn't want the chair that badly, and would instea…

The "before" was applying for a store-branded credit card at the point of sale, which evaluated your credit risk and (potentially) extended you a revolving credit line equal to what the lender deemed was your appropriate borrowing capacity, potentially far in excess of your purchase amount. Affirm is just a "micro-transaction" take on that very large and lucrative market. They extend a fixed term, one-time line of cr…

A.k.a. subprime mortgages, 2020 edition.

Re: Affirm Public S-1 Filing

#49

Post by BMorearty »

subsubzero wrote: post #4

The floodgates in 2020 have opened with IPOs of alot of these unicorns, Palantir, doordash, airbnb, affirm, jfrog, snowflake, asana. I wonder why the sudden timeframe to go public. My guess is they want to ride the wave of stimulus money that has been going on during the spring/summer and the 2nd round which has yet to happen.

In Airbnb’s case their hand was forced. RSUs given to employees in 2014 are going to expire if Airbnb waited til 2021.

Re: Affirm Public S-1 Filing

#50

Post by bertjk »

subsubzero wrote: post #14
xoxoy wrote: post #5

Earlier quoted context omitted.

I mean look at the market - we’re at all time highs. It’s more the trillions the Fed pumped into the markets than stimulus.

yeah its probably this, market caps on some of these money losers is stratospheric. I think alot of people forgot the lessons of 2000. Take Palantir, a company that is 11 years old and for the past 3 years has lost 600M a year. What monopoly will this company carve out for itself to achieve this lofty valuation? Or lets look at doordash [1] despite the pandemic and most of its workers not being employees(low paid gig…

What makes you think the fed's tap will ever get turned off? What preconditions do you think we have to see before it happens?

In the past, every time I thought "the Fed will have to tighten soon" something happens which somehow, magically, always requires more easy money to solve.

Example: Easy money caused a housing bubble that burst? Now we need easy money to fix unemployment and keep the markets from seizing up.

It seems that politicians have now decided that the easy-money solution is always the easiest one, with the least traceable future negative ramifications.

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