On Wednesday, the ‘buy now, pay later’ service Affirm debuted on the public markets and popped over 100% on its first day of trading. With its share rise and now sporting a market cap of nearly $24 billion, many investors in Affirm have reaped big monetary windfalls from the company’s IPO, including the e-commerce company Shopify.

Shopify entered into a strategic partnership with Affirm six months ago and as a result, got over 20 million shares of the company. Affirm closed trading on Wednesday at $97.24 apiece, making Shopify’s stake worth close to $2 billion.

$2 billion, at least on paper, represents an unprecedented win for a six-months running partnership that makes Affirm the sole and exclusive provider of point-of-sale financing for Shop Pay, Shopify’s checkout service. The partnership is set to run for much more time.

As part of its partnership with Shopify, Affirm granted the e-commerce company warrants to buy up to 20.3 million shares in Affirm. In its S-1 IPO prospectus, Affirm billed its Shopify partnership as one that allowed it “to significantly expand the number of merchants and consumers on our platform.”

Shopify is Affirm’s third-biggest shareholder after founder Max Levchin and Jasmine Ventures, a subsidiary of the Singapore sovereign wealth fund GIC. Levchin holds an 11% stake worth $2.7 billion on paper, cementing the third big monetary win he’s secured by founding tech startups after PayPal (bought by eBay) and Slide (sold to Google for over $200 million).

Affirm raised $1.2 billion from its IPO. The ‘buy now, pay later’ company has a strong business that delivered $509 million in revenue in the fiscal year ended June 30, 2020. In that same period, the company reported a net loss of $113 million.

Photo: Shopify CEO Tobias Lütke, credit: David Fitzgerald/Collision via Sportsfile

Share this...

Facebook

Pinterest

Twitter

Linkedin

Whatsapp

Email

Print