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Affirm Holdings, Inc. (NASDAQ:AFRM) shares closed higher Monday, though the stock remains down by nearly 12% over the past month.
What To Know:
Needham analyst Kyle Peterson initiated coverage on Affirm Holdings with a Hold rating last week, and the analyst highlighted Affirm as a long-term winner in the buy-now pay-later space. However, he noted the company's large percentage of stock-based compensation as a drag on its valuation.
Investors may also be considering the possibility of fewer rate cuts in 2024 following the Federal Reserve's last meeting. A slew of positive economic data could also be pointing to a resilient economy that could withstand higher rates for a longer period, allowing the Fed to leave interest rates untouched in the short-term.
According to data from Benzinga Pro, Affirm shares are trading below the stock’s 50-day moving average of $38.36 and well-below its 52-week high of $52.48.
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Predicting the future in stock prices over long periods of time is challenging. Wall Street analysts use complex models that take into account interest rates, economic growth, competitive advantages, management teams and historical profitability, among a host of other factors.
If, as an investor, you want to assume most of the major factors remain stable, you can use trend analysis as a helpful tool. Using a longer term trend line or historical performance of the stock, you can aim to forecast a stock's annual rate of return.
For Affirm Holdings, over the past 5 years, it's annualized stock performance is -19.36%, and if you assume that trend continues for another 5 years, you can expect a stock to trade at $11.63.
Using a trend line (see how to perform this function here), If you choose to use a trend line, connect your two points and look into the future to the point in time in which you're curious. Once you've identified that stock price, you may want to consider what type of conditions would need to exist for the stock to justify the share price – be it an outside influence or managerial decision making.
AFRM Price Action: According to Benzinga Pro, Affirm Holdings shares closed 3.77% higher at $34.11 Monday.
Image: Courtesy of Affirm Holdings, Inc.
Posted In: AFRM
