Affirm CEO Max Levchin owes Jack Dorsey big time. Just two weeks ago, news that Apple was working on an Affirm-like buy-now-pay-later consumer service sent Affirm shares plunging 14%. Today, after Dorsey’s Square unveiled plans to buy Affirm’s bigger rival, Australia-based Afterpay, Affirm’s stock jumped back 15%. Competition from Square cancels out worries about competition from Apple, it seems.
It’s not as crazy as it appears. As MoffettNathanson analyst Lisa Ellis noted in a report today, Square’s Afterpay deal may trigger a consolidation: She cited potential buyers including Shopify, Stripe and American Express pursuing targets like Affirm and Klarna. We’ll see. Predictions that one deal will spark others don’t always pan out. In this case, though, there is clearly a gold rush underway. As Ellis pointed out, PayPal has already jumped into the market, joining existing occupants such as Sweden’s Klarna, in addition to Affirm and others.
