PreMarket Prep Stock Of The Day: Affirm's Q3 Earnings Rip

When a stock has been on your "buy" radar and has been going straight down for months, it's hard to pull the trigger to get long.

On the other hand, when the stock puts in a potential bottom and then explodes after an earnings report, the question is whether to chase it higher, wait for a pullback, or even fade the pop.

That's the exact scenario investors were faced with on Friday with Affirm Holdings Inc. NASDAQ:AFRM, which is the PreMarket Prep Stock of the Day.

Affirm's Fall From Grace: It is hard to believe that Affirm Holdings made its all-time high in November at $176.65. It backed off to the month at $126.68 and the year at $100.56. And that was just the beginning of its decline.

In Thursday's session, the issue bottomed at $13.64 and rebounded to close at $18.04. That makes for an intraday rebound of 32%. From the all-time high to its all-time low marks a decline of 92% in 6 1/2 months.

Affirm's Q3 Report: After the close on Thursday, the company reported quarterly losses of 19 cents per share, which beat the analyst consensus estimate of a loss of 54 cents by 64.8%.

This is an 82% increase over losses of $1.06 per share from the same period last year. The company reported quarterly sales of $354.76 million, which beat the analyst consensus estimate of $344.03 million by 3.12%. This is a 53.8% increase over sales of $230.66 million in the same period last year.

Affirm raised guidance for fourth-quarter sales to $345 million-$355 million against a $352-million estimate and for FY22 sales of $1.33 billion-$1.34 billion vs. $1.33-billion estimates.

Finally, Affirm reported the extension of a multiyear exclusive partnership with Shopify Inc. NASDAQ:SHOP.

What To Do? Sean Udall, CIO of Quantum Tradings Strategies, has maintained a bullish stance during Affirm's recent swoon and joined PreMarket Prep Plus to discuss the issue.

Udall was keeping an open mind on Affirm stock in Friday's session. While the issue was being discussed, it was already trading higher by $7 at $25.23.

Udall was asked how he was approaching the issue in Friday's session.

"You can try and buy it up here, but you have to be prepared to stop yourself out, assume the loss and not be upset."

AFRM Price Action: After a much higher open ($24.83 vs.$18.04), Affirm continued up to $25.32 and reversed course. As of 1 p.m. EST, the ensuing decline had found support ahead of the top of Thursday's range ($19.37), only reaching $21.21. 

The stock ultimately closed Friday's session 31.43% higher at $23.71. 

The full discussion with Udall from Friday's broadcast can be found here. In addition, Udall added commentary on several other issues including Marqeta Inc. NASDAQ:MQ, Block Inc. NYSE:SQ and PayPal Holdings Inc. NASDAQ:PYPL.

Photo courtesy of Affirm.