By Mackenzie Tatananni
Affirm stock tumbled earlier this week as concerns flared that the private-credit woes infecting software companies may be spreading to the financial technology sector. Don't panic yet, analysts say.
Affirm and peers sold off on Wednesday after Stone Ridge Asset Management said in a letter to investors that it would honor only 11% of redemption requests at its Alternative Lending Risk Premium Fund amid a wave of demand.
The fund, better known as LENDX, buys whole loans and securities backed by loans from fintech lenders. Naturally, attention has gone to one of the biggest names in the sector, Affirm, which specializes in buy-now, pay-later loans.
For good reason: A look at LENDX's latest certified shareholder report filed with the Securities and Exchange Commission shows that its portfolio includes thousands upon thousands of Affirm loans. Other names in the filing include Square ( Block), Stripe, Upstart, and LendingClub.
LENDX is a so-called interval fund, which offers limited liquidity by periodically buying back a specific percentage of shares, typically 5%. However, LENDX, has recently been exceeding that cap.
The fund offered in February to repurchase as much as 7% of shares outstanding, with an option to buy back an additional 2% of shares if the offer was oversubscribed, according to a filing reviewed by Barron's. The fund cautioned at the time that there was "no assurance" it could repurchase all the shares tendered.
Seeing as LENDX holds loans from multiple fintech lenders, the market reaction reflects fears of potential tightening in the sector's funding environment. Affirm stock, for one, closed down 6.6% on Wednesday.
However, some on Wall Street believe these concerns are overblown, and represent a contagion of fear. Mizuho analyst Dan Dolev noted that an asset-backed securities offer was upsized to $750 million from $500 million last week, indicating strong demand for Affirm's loans. Moreover, Affirm's 30-day delinquency rates were stable or slightly lower in December, to 2.7% from 2.8% in September.
The analyst believes Affirm will be able to adapt underwriting to macroeconomic and geopolitical shorts due to the short duration of its loans, which span weeks to months.
He isn't the only one. Evercore analyst Adam Frisch noted that LENDX is "still currently buying loans from Affirm." Stone Ridge is only one of Affirm's roughly 150 funding partners, he said, adding that "the majority of the company's funding sits in fixed-maturity vehicles that are not subject to redemption optionality."
Frisch, too, pointed to Affirm's ABS deal last week, noting that it was still oversubscribed despite being upsized. For now, "we remain comfortable with the company's funding outlook and its ability to support our current growth projections," the analyst said. In short: "Funding noise is loud, but the data is louder...and more compelling."
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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(END) Dow Jones Newswires
March 20, 2026 09:58 ET (13:58 GMT)
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