Potential of Upside Today From Gap Down Stocks 21 Sep 2023
As we have seen a broad market trending downwards yesterday (21 Sep 2023), I feel that it is worth paying attention to some of the stocks which are experiencing Gap down.
Below are the 5 stocks which have experiencing more than 2.5% of Gap down change. Will these stocks be experiencing a potential short upside rally tonight?
I think we should be looking at the reason behind this Gap down and determine if this is a short term ot one-off occurrences.
The reason why Affirm stocks went down on Thursday Afternoon trading could be due to the subscription service that would guarantee a 0% APR on buy now, pay later loans.
This would generate more recurring revenue in addition to the interest it already collects on loans to Affirm.
With the leak of how this would work on its iPhone application, Affirm would be charging a monthly fee of $7.99 and offer upgrades for Affirm's (AFRM) BNPL customers as well as savings account holders. The free upgrade might be a good move, but with the monthly fee, this might have negative impact on their customer retention.
Even though Affirm’s current payment plans have APRs from 0% to 36%, the new plan, called Affirm Plus would guarantee a rate of 0% APR on installment loans of up to $2,500. This might not suit customers who are used to the current 0% to low APRs payment plans.
Why would customer who are buying more than $2,500 being subjected to paying APR? Though Affirm also provide interest rate of 4.75 for their Affirm (AFRM) savings account, which is higher than its current rate of 4.35%.
Based on the 50-day MA period, Affirm is still trading above the 50-day moving averages period, despite suffering a Gap down on 21 Sep 2023.
Would this be able to offset the APR on installment loans? I would see this as a sticky good business model, but it will depend on how Affirm execute it without losing existing customer and keep new potential customer at bay.
By looking at the Gap down data for 21 Sep 2023, out of the top 5 stocks, I would see potential in Affirm when more details are released on their new APR on installment loans.
I will be watching the price action closely on Affirm in today’s trading.
Appreciate if you could share your thoughts in the comment section whether you think Affirm would have a potential opportunity for an upside?
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