We’ve been talking about Affirm (AFRM) for a while now. The holiday season makes us think about ways to save money, and Affirm has been the go-to for a lot of people (Cyber Monday saw a record 8% of all sales use a buy now, pay later (BNPL) service).
I detest the company and its stock, as you know. The company preys on U.S. consumers and the stock is overvalued (the stock is up 420% this year…)
Thing is, on that latter point, even the analysts who love it think so, too.
Of 19 analysts that cover the stock, six are bullish, eight are neutral, and five are bearish.
Of the six bullish, only two believe the stock will rise from here.
The average estimate? $29.24. The current price? $51.39.
This implies a 42% downside – one for which I’m wholly in agreement with. If most bullish analysts believe the stock has gotten ahead of itself, you know there’s some downside ahead.
Avoid the stock. Buy long-term puts, which benefit from falling stock prices.
What’s more, unlike Tesla, the stock actually looks great. There’s positive earnings strength, a positive relative valuation, and good price movement, which could imply higher prices ahead.
Should you buy?
I’d say not.
BYD is a good company. It seems to have a handle on its finances and business plan (from what we can see – Chinese companies are held to different standards than what the SEC demands of U.S. counterparts).
They sell EVs and plug-in hybrids, which should offset some (some) falling demand for purely electric.
But even good companies in bad trends can fall victim to declining stock prices.
Chinese EV demand is stronger than the U.S.’s, yes.
I don’t live in China, so I don’t have direct observational experience – yes.
But the Chinese government recently ended a subsidy for consumers (and tax breaks are likely to follow) that I believe we haven’t seen the full effects of quite yet. Plus, EV demand will cool down a bit in 2024 anyway, so avoid this stock – even if everyone’s talking about it right now.
Boeing (BA) has had quite the tumultuous past few years… since its fatal crashes in 2018 and 2019, the stock is down over 30%.
And it seems like every other headline is about new FAA inspections, the grounding of entire fleets because of software issues, or something like today’s – the urging of 737 Max inspections because of a “possible loose bolt” issue.
With a company in the crosshairs like Boeing, an American stalwart, it would usually be amazing when small news like a loose bolt drives down prices to a good buy level.
It’s not the case now, though, even if the stock was down yesterday and is down premarket today.
Its profitability has been declining through the year, debt levels remain stagnant, and it’s been hemorrhaging cash.
What’s more, its price compared to its sales is over two (good rule of thumb is looking at companies below two – but this is case by case).
I’d avoid for now.