Buy now, pay later firm Affirm is aiming to raise nearly $1.2 billion in its initial public offering (IPO). The company has set its new target price range between $41 and $44 per share, up from $33 to $38. Affirm plans to sell 24.6 million shares, according to the company’s filing with the Securities and Exchange Commission.
At its target price range, the company would have a market capitalization of $11.9 billion.
The company’s decision to go public comes at a time when consumers increasingly prefer flexible payment options in the face of financial challenges posed by the pandemic. In turn, retailers have looked to partner with players such as Affirm, Afterpay and PayPal to improve their sales and provide added value to their customers. In August last year, David’s Bridal rolled out a buy now, pay later option on its platform in partnership with Affirm. More recently, Neiman Marcus partnered with Affirm to offer flexible payment options on high-end luxury products.
Affirm’s most important partnership is, however, with Peloton Interactive Inc., as it accounted for 30 percent of its total revenue in Q3. Overall, the company’s top 10 merchants account for 37 percent of its revenue, which is indicative of high risk if the company loses any of its top partners, Bloomberg reported. The company has a current merchant base of more than 6,500 companies.
The company’s filings also reflect a $15 million loss on a revenue of $174 million last year. This was an improvement from 2019 when the company lost $31 million on revenue of $88 million.
So far, Affirm has raised more than $1.3 billion in funding. After a recent $500 million investment round, the company was most valued at more than $4 billion. The flexible payment solution provider was founded in 2012 by PayPal co-founder Max Levchin. He continues to be the largest shareholder in the company along with Founders Fund, Jasmine Ventures, Khosla Ventures, Lightspeed Venture Partners and Shopify.