Affirm, a company that has helped popularize a “buy now, pay later” trend for Internet shopping, offered its shares to the public on Wednesday. The listing came weeks after the company canceled plans to go public amid uncertainty over how to price the sale.
Affirm eventually listed its shares at $ 49 under the symbol AFRM. That’s significantly higher than the $ 33- $ 38 range it predicted in December, and above the $ 41- $ 44 forecast earlier this week.
The event means Affirm founder and CEO Max Levchin, who owns 27.5 million shares, will bring in more than $ 1 billion from the IPO and may solidify his reputation as a financial visionary. Levchin is already known in Silicon Valley circles as a member of the “PayPal MafiaFor his role as co-founder of the payments giant, whose early executives went on to build a variety of other leading companies.
In an interview with Fortune, Levchin reiterated his familiar mantra that the credit card industry is deceptive and immoral; and that Affirm offers a way to credit consumers with dignity.
“We don’t take advantage of the mistakes and misfortunes of our customers. The whole premise of the credit card industry is based on late fees. Deferred interest is a terrible product, ”Levchin said.
Affirm, which is known for its partnership with exercise bike maker Peleton, also charges many of its customers interest during installment payments. But the company does so in a way that Levchin says is completely transparent, allowing consumers to see the full cost of the payment plan, including interest, up front.
According to a Business Insider reportAffirm’s interest rates reach up to 30%, although around 40% of its customers pay no interest. Affirm also generates considerable revenue through fees charged to merchants, which can be as high as 7%.
Founded in 2012, Affirm now has over 6 million customers and offers its pay-as-you-go offering to a wide range of merchants, from discount sellers to luxury vendors. The company recently expanded its reach through a partnership with online retail giant Shopify.
While Affirm has successfully harnessed the popularity of the rapidly growing ‘buy now, pay later’ trend, with its European rival Klarna, analysts say it faces many challenges. These include a new competing product from Levchin’s Alma mater, PayPal, as well as the prospect that merchants will push back its fees, just as they have done against credit card companies in recent years. All of this could make it harder for Affirm, which lost $ 112 million in its last fiscal year, to ever make a profit.
Levchin claims not to be concerned about these challenges, noting that any business in a thriving market will face competition and price pressures. He also asserted that Affirm’s commitment to morality and ethical treatment of its customers would ensure its long-term success.
When asked whether Affirm’s assertions about morality risked being nothing more than corporate platitude, Levchin acknowledged that such lofty statements are common, but said that “no one has gone as far as putting customers first ”.
Levchin also said Affirm is taking the same stance as a growing number of American companies that will not offer financial support to politicians who tried to overthrow the recent election and American democracy.
Regarding the future of financial services, an industry he helped define, Levchin said the United States must be the first country to “fully digitize our national currency” – a move that he said will be essential to remain a leader in global trade. .
The Affirm IPO is the third time Levchin has taken a company public – he was CTO of PayPal and a member of the board of directors of Yelp when those companies went public – but the first as CEO. He described the experience as exciting, but one that he wants to end with.
“The honest truth is that the IPO itself is an adrenaline rush that leads to a big reveal. But I’m desperate to get back to work building this business, ”he said.
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