In an interview with CNB’s Jim Cramer on Monday, he said: affirm CEO Max Levchin has revised his company’s strategy and proposed a “buy now, pay later” benefit by not charging customers late fees.
“We are completely aligned with the consumer. If the consumer doesn’t repay, we just lose money,” Levchin said. “There’s no magic in the business model. That transparency makes us perfectly aligned with the person.”
Late fees aren’t necessary “if you’re really good at underwriting,” Levchin said.
He advocated greater clarity and transparency across the lending sector. He said he hopes the industry will gravitate towards simple interest, fixed-term deals, suggesting such models make borrowers less likely to fall into deep debt.
When it released its quarterly report last month, it affirmed Beat’s profits and sales. The stock is currently up 7.82% since the beginning of the year.
Levchin offered some insight into consumer behavior during the holiday season, noting that Affirm is seeing a significant increase in travel spending, especially among Gen Z shoppers. He also said the company has seen a “significant rebound” in spending in the sporting goods category, which had lagged last year.
Levin said more consumers are signing up for Affirm’s six-month payment plan, a good indicator that people are shopping and looking to “stretch their holiday funds into next year.”
“Our credit numbers are very strong, so they’re paying off their bills, but they’re also trying to stretch their money,” Levchin said of Affirm users. “They are price sensitive and looking for deals.”
