Affirm (AFRM) topped fiscal revenue estimates and narrowed expected losses per share in its third quarter earnings report. Affirm Founder and CEO Max Levchin joins Market Domination to break down the company’s future as it navigates the Fed’s high interest rates.
"There is an oft-repeated narrative that it’s a huge problem for Affirm that the rates are not coming down. And that’s just plain inaccurate," Levchin tells Brian Sozzi. "So long as we are keeping job losses in check, people are able to spend, people are able to transact, people are also able to pay their bills, and that’s really good for Affirm," he explains, attributing the company’s strong quarter to the Fed’s consistent rates.
Levchin adds, "The economy is in a better shape than popular opinion will have you believe…From where we sit, people are spending," he explains, saying that Affirm’s users are still able to pay their bills.
While Affirm reported a strong quarter, not everyone is sold on the buy now, pay later scheme. Critics often point to the program as potentially creating a phantom debt issue, which Levchin aims to debunk. Monthly installments are reported to credit bureaus, he explains, adding that the weighted average life of 6-week loans is 3 weeks. "That is just a headline that is made up to get people riled up and click," he says.
The CEO says that Affirm users are paying their bills "in a very predictable fashion." While describing credit cards as "buy now, pay forever," he says that Affirm has a rigid system that gives users control over their finances and allows them to adjust their payment timelines if needed, with no incremental fees.
Having spent many years in the tech industry before Affirm, Levchin dubs himself as "an extreme techno-optimist." He says that people should be excited about artificial intelligence and points to Affirm’s recent initiatives to use AI as a customer service agent. "We still guarantee that any human who wants to talk to a human will be able to do so," he explains, but overall, the company found that around 60% of the time, its AI chatbot satisfies user inquiries.
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