Who is mispricing whom?
This morning Affirm, the buy-now-pay-later financing startup, raised its IPO price range to $41 to $44 per share, up from a previous range of $33 to $38 per share.
The sharp repricing is steep in percentage terms, with the bottom end of Affirm’s range rising a little more than 24% and the top end gaining a smaller 16%.
For Affirm, the news means a larger IPO fundraising haul and a confirmation from public investors that its model, its economics, its business performance and its relationship with Peloton are incredibly valuable.
As TechCrunch wrote when Affirm first affixed a price range to its IPO, the fintech unicorn will be worth a multiple of its final private price. The company was valued at around $2.9 billion in a 2019 round and raised more capital at a higher $19.93 per-share price in September of 2020; the company’s IPO price range is now more than double what the company was worth less than half a year ago.
Let’s calculate Affirm’s new simple and diluted new valuation ranges, and contrast those with its recent revenues to get a handle regarding how close to software numbers the startup can get its revenue multiple.
Inside the math
Very little has changed in Affirm’s S-1 filings when it comes to share counts. Today’s new S-1/A filing does include a note concerning around 18,824 shares, but past that it appears that most things are holding steady.