OFI) also struggle with ROIC below their WACC, similar to Affirm.Affirm Holdings, Inc. (NASDAQ:AFRM), a leading financial technology company, offers innovative buy now, pay later (BNPL) services. This allows consumers to make purchases and pay for them over time without incurring hidden fees. Affirm competes with other fintech companies such as Upstart Holdings, Inc. (NASDAQ:UPST), SoFi Technologies, Inc. (NASDAQOFI), and traditional financial institutions.
In analyzing Affirm's financial performance, its Return on Invested Capital (ROIC) is -3.09%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 17.66%. This negative ROIC indicates that Affirm is not generating enough returns to cover its cost of capital, which is a concern for investors.
Comparing Affirm to its peers, Upstart Holdings has a ROIC of -19.91% and a WACC of 12.94%, resulting in a ROIC to WACC ratio of -1.538. This suggests that Upstart is also struggling to generate returns that meet its cost of capital, similar to Affirm.
SoFi Technologies, with a ROIC of -0.17% and a WACC of 15.96%, has a ROIC to WACC ratio of -0.011. Although SoFi's ROIC is closer to its WACC compared to Affirm, it still falls short of covering its cost of capital.
In contrast, Robinhood Markets, Inc. (NASDAQ:HOOD) stands out with a positive ROIC of 9.01% against a WACC of 12.87%, resulting in a ROIC to WACC ratio of 0.700. This indicates that Robinhood is effectively generating returns above its cost of capital, unlike Affirm and most of its peers.
