Affirm stock gains after inking $4B loan deal with Sixth Street

Affirm Holdings (NASDAQ:AFRM) shares climbed 4.6% in Friday premarket trading after agreeing to sell up to $4B of consumer installment loans to private-credit firm Sixth Street, marking the largest capital commitment secured by the buy now, pay later platform to date.

The deal, which will be in the form of a three year, forward-flow agreement, provides additional off-balance sheet funding with the ability for Affirm (NASDAQ:AFRM) to extend up to more than $20B in loans over the next three years as the company continues to scale its payment network.

Note that a forward-flow agreement allows the buyer to commit to buying loans prior to their origination.

“Over the last several years, we have been extremely thoughtful in working with a diverse mix of world-class investors as we empower more consumers and merchants with our honest financial products,” said Brooke Major-Reid, chief capital officer at Affirm.

As of Sept. 30, 2024, Affirm’s (AFRM) total funding capacity stood at $16.8B, up more than 50% over the last two years. The company generated over $28 billion in gross merchandise volume for the last twelve months ended Sept. 30.