The S&P (SP500) lost 2.0%, while the tech-heavy Nasdaq Composite (COMP:IND) dipped 1.2%, and the blue-chip Dow (DJI) fell 3.0%.

Financials extended losses for the second straight week. The State Street Financial Sel Sec SPDR ETF (XLF) was down 1.67% from the prior week to $50.57.

The Middle East conflict adds to concerns around consumer confidence. Investors were already anxious over the potential impact of AI on the labor force and credit quality in lending to non-depository financial institutions, S&P Global Market Intelligence reported, citing Piper Sandler analyst Scott Siefers.

Last week, HSBC Holdings (HSBC) stood out as a clear winner among the megacap stocks. However, this week the stock recorded the largest loss in the category.

HSBC fell 9.78% week-over-week to $84.05.

This week, bank stocks largely underperformed as the Middle East war clouded an already uncertain economic outlook, according to a note by S&P Global Market Intelligence.

The war disrupted the flow of oil through the Strait of Hormuz and caused a spike in oil prices, the report noted.

Large banks followed in the list, with Goldman Sachs Group (GS) pulling back by 4.44% to $821.42, Morgan Stanley (MS) down 3.75% W/W to $160.27, and JPMorgan Chase (JPM) falling 3.60% to $289.48.

Goldman Sachs CEO David Solomon said in a speech at a business summit on Wednesday that he was surprised at the “benign” reaction ​in financial markets over the conflict in the Middle East, and it may take a “couple of weeks” for investors to ‌more fully digest the impacts, Reuters reported.

Notably, Morgan Stanley was said to be eliminating roughly 3% of its global workforce, or about 2,500 jobs.

Among largecap stocks, Rocket Companies (RKT) topped the losers, shedding 17.81% of its value to end at $14.95.

The stock slumped after Better.com (BETR) partnered with OpenAI (OPENAI) to launch a conversational credit decision engine in ChatGPT.

The decision app for mortgages and home equity loans connects users with Better’s Tinman engine directly in ChatGPT, allowing lending teams to approve more loans faster.

“Big mortgage aggregators in the broker and correspondent channel charge what is essentially a 1%-2% tax on each loan just to underwrite a mortgage and deliver it to an institutional investor. That ends now,” said Leah Price, general manager of the Tinman AI Platform.

Japanese banking giant Nomura Holdings (NMR) was the second-biggest loser of the week, having retreated 14.56% to close at $7.69. Japan’s stock market was significantly hit by the volatility stemming from the Middle East conflict, Reuters had noted.

On a surprise note, Circle Internet Group (CRCL) (+22.14% to $101.91) and Coinbase Global (COIN) (+12.15% to $197.22) topped the gainers in the category.

Crypto stocks saw a volatile week as the stalled crypto bill made headlines this week.

U.S. President Donald Trump was said to have met Coinbase CEO Brian Armstrong privately on Tuesday before publicly backing the company’s stance in an ongoing lobbying dispute with banks that has stalled a major cryptocurrency bill.

Crypto exchange stocks and bitcoin miners surged as Trump urged banks to “make a good deal” with the crypto industry to advance the law.

However, talks on the landmark legislation reportedly reached a stalemate after banks said they could not support a compromise proposed by the White House. The move raised doubts about whether the bill will pass this year and drew criticism from Trump, who accused lenders of trying to derail it.

Affirm Holdings (AFRM) (+10.05% to $51.70) was gaining after the buy now, pay later lending platform said it is expanding its partnership with Stripe (STRIP) to support Shared Payment Tokens, which are expected to enable AI agents to initiate purchases on behalf of shoppers.

SoFi Technologies (SOFI) (+6.42% to $18.90) was rising after CEO Anthony Noto was reported to have acquired shares worth ~$1M. Additionally, the company announced grand plans for its U.S. dollar stablecoin, SoFi-USD.

On the other hand, Marex Group (MRX) (-17.97% to $35.65) led the midcap losers, despite exceeding Q4 consensus in terms of earnings and revenue. StoneX Group (SNEX) (-15.25% to $108.06) hit a new 52-week low this week.

Figure Technology Solutions (FIGR) (+20.57% to $30.48) was among the notable gainers. The blockchain-native capital marketplace for tokenized assets was a likely beneficiary of the crypto price swings and recent talks on the crypto bill. Additionally, FIGR reported its February operating metrics this week.

For the smallcap stocks, Gemini Space Station (GEMI) led the gainers, with a jump of 48.26% to close the week at $8.94. Real estate tech stock loanDepot (LDI) (-14.49% to $1.77) and VersaBank (VBNK) (-12.85% to $14.38) topped the losers.

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SPT lets AI agents initiate purchases using a shopper’s permission and preferred payment method without exposing sensitive credentials.

The collaboration is set to bring the buy now, pay later lending platform’s pay-over-time options to checkout in AI-driven commerce experiences.

Shoppers can see the total cost upfront and select a clear repayment plan even when an AI assistant is helping them browse and buy, while merchants can accept those payments on the backend through Stripe.

“With our Shared Payment Tokens expanding to include Affirm, AI agents will be able to present buy now, pay later options at checkout,” said Kevin Miller, head of payments at Stripe.

The facility will be available for Stripe’s direct merchants, and will launch for merchants not handling payments with Stripe later in 2026.

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The rules seek to establish a licensing and supervision framework for the firms; prohibit excessive fees and limit late fees and other penalties; set rules for the timely resolution of consumer disputes; and protect consumer data.

Furthermore, lenders can be required to disclose if loans will be reported to credit reporting agencies.

Buy Now, Pay Later loans are not subject to uniform rules on disclosure of loan terms, data privacy, credit reporting, and fees that other consumer loans must adhere to, the Monday press statement said.

“These new nation-leading regulations ensure that lenders know we have clear disclosures, limits on fees, and real oversight so families don’t get pushed into a debt spiral while big financial companies cash in,” said Hochul.

The draft regulations are subject to a 10-day preproposal comment period beginning today. The law and regulation will take effect 180 days after the rule is adopted.

Related tickers include Affirm (AFRM), Block (XYZ), Klarna (KLAR), PayPal (PYPL), and Sezzle (SEZL).

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Management View

• Max Levchin, Founder, CEO & Chairman, described the results as “excellent once again” and announced an upcoming investor forum on May 12, where the company will discuss “commercial and product initiatives and update our medium-term financial framework.”
• Levchin highlighted the growth of Affirm’s Card product, noting “GMV year-over-year for the quarter we’re reporting was up just under 160%. Active cardholders went up 121%. 0% deals on the Card went up 190% year-over-year.”
• Levchin also referenced Affirm’s diversification, stating “the business is growing quite well, and we’re quite happy with the diversification…that we see in the GMV.”
• Robert O’Hare, Chief Financial Officer, commented on merchant concentration, explaining “the top 5 that we disclosed for Q2 of FY ’26 is actually a different subset of merchants that we’re comparing to in fiscal ’25 in the same period…we have a new top 5 as a result of” a major partner transition.
• O’Hare spoke on RLTC (revenue less transaction cost) margins: “we do expect to see RLTC take rates that are slightly above 4%. I think that’s true in both Q3 and Q4 in the guidance that we provided.”

Outlook

• Affirm’s management guided to GMV growth of 30% in the third quarter and 25% in the fourth quarter, with Levchin stating, “you’re kind of pointing to a slowdown in GMV growth to 30% in the third, 25% in the fourth quarter…No specific call-outs. I mean, we are obviously comping the transition with a large retail partner.”
• O’Hare confirmed RLTC take rates “slightly above 4%” for both Q3 and Q4.
• Levchin indicated ongoing expansion in the U.K. and plans for more countries ahead, reinforcing that “both international and the card are still significant drivers.”

Financial Results

• O’Hare highlighted the recent ABS deal: “The last deal we just priced was done with a spread of under 100 basis points. It’s really remarkable. We haven’t done that since 2021. And the weighted-average yield on the deal was below 4.6%.”
• Levchin stated that the “other” GMV category now represents 15% of total GMV and is “growing triple digits.”
• The company emphasized strong merchant and cardholder growth, with wallet partnerships driving an inflection in active merchant growth.

Q&A

• Andrew Jeffrey, William Blair: Asked if business is widening beyond top merchants. Levchin deferred to O’Hare, who said the top 5 merchants list changed due to a large partner transition and that diversification is increasing.
• Ramsey El-Assal, Cantor Fitzgerald: Inquired about consumer and credit trends. Levchin responded, “the consumer we see to date is quite healthy…we feel pretty good about both the demand and the ability and willingness to repay.”
• William Nance, Goldman Sachs: Questioned RLTC margin trajectory. O’Hare: “the take rates and the dynamics will be pretty similar to what we saw from a trend perspective in Q2…we are seeing really nice benefits on the transaction cost with funding costs being the clearest example.”
• Jason Kupferberg, Wells Fargo: Asked about competitive impacts. Levchin said, “we saw no effect in the sort of some of the more ultra-aggressive…offers, but we did not see any [indiscernible].”
• Multiple analysts focused on the Affirm Card, international growth, funding markets, regulatory environment, and new product initiatives including AI-driven Boost AI and partnerships such as Intuit/QuickBooks.

Sentiment Analysis

• Analysts were generally positive but pressed on sustainability of growth, competitive pressures, funding, and the margin outlook. Questions were detailed and forward-focused, indicating engagement but also some skepticism about deceleration in growth rates and margin trends.
• Management’s tone was confident and upbeat, with Levchin repeatedly referring to strong metrics and O’Hare emphasizing robust execution in capital markets. Levchin used phrases such as “super excited about the product” and “we are absolutely very attentive,” reflecting optimism and focus on execution.
• Compared to the previous quarter, management’s tone remained positive, but analysts displayed slightly more caution regarding future growth rates and funding dynamics.

Quarter-over-Quarter Comparison

• The Q2 2026 call featured continued focus on the Affirm Card and international expansion, with much larger year-over-year growth figures for the Card product than in Q1.
• GMV growth guidance for Q3 and Q4 was discussed in this quarter, with explicit percentages, whereas the previous quarter focused more on explaining the revenue mix and margin targets.
• Both quarters highlighted strong capital markets execution, but Q2 provided more detail on recent ABS spreads and yields.
• Management’s tone was consistently upbeat both quarters, but Q2 saw more discussion of product innovation (AI, Boost, Intuit partnership) and regulatory strategy (bank charter application).
• Analysts shifted their focus from the Amazon agreement (Q1) to merchant diversification, product mix, and the effects of wallet partnerships and new verticals in Q2.

Risks and Concerns

• Levchin noted ongoing regulatory scrutiny and emphasized Affirm’s proactive approach, stating, “we are all regulated, always regulated by 51 distinct entities, federal and 50 states, and that’s part of the job.”
• Management addressed competitive pressures, but stated, “we saw no effect” on merchant pricing from aggressive competitor promotions.
• Questions about credit risk and loss provisions were met with reassurances about healthy consumer behavior and stable credit quality.
• The company discussed the small-scale nature of its rent vertical test, emphasizing limited exposure and deliberate underwriting.

Final Takeaway

Affirm management highlighted robust growth in its Card product, increasing diversification across merchants and verticals, and significant progress in international markets, especially the U.K. The company signaled ongoing innovation through AI-driven product enhancements and new partnerships, while maintaining a strong capital markets position and managing regulatory complexity. Management expects GMV growth of 30% in Q3 and 25% in Q4, with RLTC take rates slightly above 4%, positioning the company for continued expansion even as it navigates a changing environment and transitions with major partners.

Read the full Earnings Call Transcript

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Affirm (AFRM) stock dipped 3.2% in after-hours trading.

The buy now, pay later lending platform now expects FY2026 gross merchandise volume of $48.30B-$48.85B (midpoint $48.58B vs. Visible Alpha consensus $48.3B), up from its prior guidance of more than $47.5B. It sees full-year revenue at $4.09B-$4.15B vs. the $4.06B consensus.

Adjusted operating margin is seen at 27.4%-28.1% compared with its previous guidance of over 27.1%.

Affirm (AFRM) expects Q3 GMV of $11.00B-$11.25B vs. Visible Alpha estimate of $11.1B and revenue of $970M-$1.00B vs. $975.7M consensus.

Q2 GAAP EPS of $0.37, topping the average analyst estimate of $0.27, rose from $0.23 in Q1 and $0.23 in last year’s Q2.

Total net revenue of $1.12B for the quarter ended Dec. 31, 2025, beat the $1.06B consensus and increased from $933.3M in the prior quarter and $866.4M in the year-ago period.

Contributing to the revenue growth were: 32% increase in network revenue, a 21% increase in interest income, 48% growth in gain on sales of loans, and a 49% rise in servicing income.

GMV volume climbed to $13.8B from $10.8B in Q1 and $10.1B in the prior year’s Q2, exceeding the $13.3B Visible Alpha consensus.

The number of active consumers, excluding the discontinued Returnly business, rose 23% Y/Y to 25.8M at Dec. 31, 2025, while transactions per customer increased 20% to 6.4 during the same period.

Adjusted operating margin was 30.0% vs. 28.3% in the prior quarter and 27.4% a year ago.

Funding capacity rose to $28.0B at Dec. 31, 2025, from $26.6B at Sept. 30.

Conference call at 5:00 PM ET.

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Under the multi-year alliance, Affirm (AFRM) will become the exclusive BNPL solution built into QuickBooks Payments. In the months ahead, Affirm (AFRM) will roll out to eligible businesses in the U.S. that use Intuit’s (INTU) payment processing service, letting them get paid upfront while approved customers can pay invoices over time.

The integration comes as some 56% of small firms are owed money from unpaid invoices, averaging $17.5K per business, according to a May 2025 survey commissioned by Intuit QuickBooks.

“With more than $2 trillion in invoices managed on our platform each year, this integration further accelerates the frictionless payments capabilities we offer to our customers to manage and grow their business all-in-one place,” said David Hahn, executive vice president, general manager, Services Group, Intuit.

Affirm (AFRM) struck a similar pay-over-time deal last week with fintech company Fiserv (FISV), allowing thousands of Fiserv U.S. bank and credit union clients to offer flexible payment options without needing to create new lending products.

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Shares were +3.48% pre-market to $71.10.

“We believe this could be a game-changer for AFRM as it would give AFRM access to deposit funding for loans, reduce third-party risk by moving several products in-house (rather than offering them through banking partners), while also potentially accelerating growth and/or product development,” said Needham analysts.

The investment bank said it is increasingly confident in AFRM’s medium-term growth and profitability outlook, and upgraded the shares to Buy from Hold with a price target of $100.

Needham’s rating aligns with the average sell-side analysts and Seeking Alpha authors rating of Buy. Meanwhile, SA’s Quant rating system grades the stock as Hold.

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