By Senad Karaahmetovic

David Chiaverini, a Wedbush analyst, began research coverage on Affirm. (NASDAQ:) Underperform was the target price.

Affirm shares are at risk of a 40% drop in value due to falling growth rates and slower earnings.

Moreover, Chiaverini is concerned “about Affirm’s path to GAAP profitability, increasing competition in the buy now, pay later (BNPL) space, industry forecasts calling for slowing e-commerce sales (which drive Affirm’s gross merchandise volume, or GMV), and its ability to cover its cost of capital as funding costs increase.”

The analyst also mentioned a “rich” valuation as the BNPL stock trades at a premium to other neobanks and consumer finance leaders.

“AFRM trades at 3.7x our 2023 sales forecast compared to neobank peers at 2.9x and traditional consumer finance peers at 1.4x. Our $15 target is based on AFRM trading at 1.9x our 2026 revenue forecast discounted back to 2023 at 15% annually.”

Affirm shares today are almost 5% lower.