Market Minute: Earnings Preview: AFRM, DKNG

Maria Schrater

Contributor

While not as anticipated as Mag 7 earnings, there are a lot of interesting companies reporting after the bell today. Let’s preview a few of them.

Affirm (AFRM), a Buy Now, Pay Later company, is down 15% year-to-date – but still up nearly 50% over the last year. The stock is rebounding from an April low and currently has an options market implied move of around $6, or almost 12%. Zacks expects it to report a loss per share of -$0.08, which is still 81% higher than last year, and revenue of $783.1 million (+36% year-over-year).

Affirm makes money from a variety of channels: like credit card companies, it charges money to its merchant network. It collects interest income (the bulk of its revenue), loan servicing income, and makes money from its card network. Investors will also be watching its Gross Merchandise Volume (GMV) stats, as well as active consumers and transactions per customer.

Affirm has a chance to shine as consumers, who were already bargain-hunting and cutting back before the trade war, deal with the threat of recession and tariff price inflation. It is still most popular with younger generations, but maybe can expand its demographic reach.

DraftKings (DKNG), a sports betting company, is down 7% year-to-date and down 21% over the last year. The options market has an implied move of $2.66, or around 8%. It is a researched phenomenon that during recessions or economic troubles, gambling revenues actually go up. However, a 2011 paper published in Springer Nature posits that “only lottery consumption appears to be recession-proof.” However, this is before being able to bet using an app on one’s phone.

Investors will be watching its Monthly Unique Payers (MUP) and Average Revenue per MUP statistics. If it can keep both of those growing, it could be rewarded. Zacks anticipates EPS of $0.18 (+160% year-over-year) – which would be its second-ever profitable quarter – and revenue of $1.42 billion (+21% year-over-year).

Tune into the Schwab Network for earnings breakdowns and more!