With the business potentially at an important milestone, we thought we'd take a closer look at Affirm Holdings, Inc.'s (NASDAQ:AFRM) future prospects. Affirm Holdings, Inc. operates payment network in the United States, Canada, and internationally. On 30 June 2024, the US$14b market-cap company posted a loss of US$518m for its most recent financial year. Many investors are wondering about the rate at which Affirm Holdings will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

According to the 18 industry analysts covering Affirm Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$76m in 2026. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 77% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Affirm Holdings' growth isn’t the focus of this broad overview, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Affirm Holdings currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Affirm Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Affirm Holdings' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is Affirm Holdings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Affirm Holdings is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Affirm Holdings’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.