Max Levchin, CEO of Affirm Holdings Inc. AFRM, believes that the economy is more resilient than commonly perceived. In an interview with Yahoo Finance, he stated that consumers are still actively spending and utilizing flexible payment options such as Buy Now, Pay Later (BNPL) services.
Levchin also addressed concerns about high interest rates impacting Affirm negatively, stating that this narrative is inaccurate. He noted that as long as job losses are kept in check and people can continue to spend, transact, and pay their bills, it is beneficial for Affirm. The company offers a BNPL service with an initial interest-free period of two weeks, after which a 15% annual percentage rate (APR) is applied if payments are extended.
Despite economic challenges and inflation, Affirm has shown impressive growth and retention of consumers. Its user base has grown by 18% over the past year, reaching 17.8 million active users. Revenue has also increased by 51%, indicating a shift towards using debt to manage retail spending. However, this trend also highlights broader economic pressures as Americans are saving less of their disposable income.
While tools like Affirm’s BNPL make spending easier during tough economic times, they also underscore the growing reliance on deferred payment plans. With retail prices on the rise, the long-term effects of this trend are yet to be fully understood.
In summary, Max Levchin believes that the economy is more resilient than popular belief suggests and that consumers are not holding back on spending despite economic challenges and inflation. He also notes that tools like Affirm’s BNPL make spending easier during tough times but highlight broader economic pressures such as deferred payment plans and a shift towards using debt to manage retail spending.
