Affirm (NASDAQ:AFRM) is scheduled to release its third quarter earnings report on Thursday, May 8, 2025 (fiscal ends in June). Historical data suggests a potential negative reaction in the stock price after the results announcement. Over the past five years, AFRM has experienced a negative one-day return in 63% of earnings announcements, with a median negative return of -10.5% and a maximum negative return of -22.6%.
For event-driven traders, understanding these historical patterns could offer a strategic advantage. There are two primary approaches: first, assess the historical probability of a negative return and establish a position before the earnings announcement. Second, analyze the correlation between the immediate stock reaction and medium-term returns following the earnings release to inform post-earnings trading decisions.
Current consensus estimates predict earnings per share of $0.32 on revenue of $783 million for this quarter. This represents significant growth compared to the prior-year quarter, which reported a loss per share of $0.41 on revenue of $576 million. This anticipated growth is likely fueled by an increase in both the number of consumers and the transaction frequency per active user.
From a fundamental perspective, Affirm currently has a market capitalization of $17 billion. The company’s revenue over the trailing twelve months stands at $2.8 billion. Notably, Affirm has achieved operational profitability with $31 million in operating profits, although it reported a net loss of $199 million.
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AFRM Stock Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 16 earnings data points recorded over the last five years, with 6 positive and 10 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 38% of the time.
- Notably, this percentage increases to 42% if we consider data for the last 3 years instead of 5.
- Median of the 6 positive returns = 30%, and median of the 10 negative returns = -10%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
AFRM Stock Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation of AFRM Stock With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Affirm stock compared with the stock performance of peers that reported earnings just before Affirm. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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