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Analysts told investors in a note that it is too early to call for a durable GMV and margin inflection.
“As the loan sale environment remains challenging with higher interest rates, increasing concerns about the macro backdrop and consumer credit, we believe the risk of the environment remaining under pressure for a few more quarters is high and that it is too early to call for an inflection,” they wrote.
“At the same time, we believe consensus estimates are already pricing in a reasonable FY24 GMV at $24.3B compared to guidance of more than $24B as of last quarter and that margin upside would likely come from a re-acceleration in GMV growth and an improving loan sales environment,” they added.
The firm believes the combination of these factors could reduce the odds of a positive FY24 GMV outlook surprise, while a tougher loan sales environment could reduce gain on sale margins, continuing to put pressure on near-term revenues.
“Putting this together, we believe the near-term setup has more downside risks for AFRM shares and that the upside optionality is more limited,” analysts concluded.
