Affirm, an 8-year-old ‘buy now, pay later’ firm founded by PayPal co-founder Max Levchin, filed to go public amid doubling year-over-year revenue in the third quarter and narrowing losses.

Why should we care?
Affirm’s move follows a series of big-tech companies that are going public this year, including DoorDash and Airbnb. The company, which is not yet profitable, is riding a wave of digital financial services adoption during the pandemic, with an increase in revenue coming from home goods. Affirm’s revenue model is based on fees it earns when it helps merchants convert a sale. It also makes money through interest income on the simple interest loans that it purchases from its originating bank partners. Risk factors include a short-term, non-exclusive agreement with partner Cross River Bank, and the large percentage of its revenue that’s concentrated with a single merchant partner, Peloton. Peloton made up 30% of the company’s total revenue for the third quarter of this year. “The significance of Peloton in our portfolio has increased as a result of consumer spending trends on home fitness equipment, and there can be no assurance that such trends will continue,” the filing said.