Affirm (AFRM) CEO Max Levchin isn’t buying the recession talk.
“I think the news of the American demise are greatly exaggerated, if we’re honest here,” Levchin told Yahoo Finance following the company’s fiscal 2026 second quarter earnings release.
He pointed to “tremendous” shopping and demand for the company’s services, such as buy now, pay later (BNPL), as evidence that the US consumer remains resilient.
Levchin, co-founder of PayPal (PYPL), anchored this optimism in Affirm’s internal data, citing “very solid” repayment curves. He noted that these curves — which track whether borrowers pay their bills or default — have remained “tightly packed” for the past eight quarters, suggesting that “consumers are performing financially … as they have been” for years.
The CEO credits the company’s proprietary AI underwriting for maintaining high credit quality, calling its in-house AI models the “secret sauce” that enables the firm to filter for “healthy” consumers.
The broader macro picture, however, paints a murkier image. While Levchin sees a healthy borrower, the University of Michigan’s Index of Consumer Sentiment points to Americans who aren’t exactly chipper.
The index rose to 57.3 in February, beating expectations, but remains 20% below last year’s peaks. The disconnect suggests that while consumers are spending via BNPL, they are doing so under the shadow of inflation and labor market anxiety.
Moreover, even with an upbeat CEO outlook and Affirm beating both top- and bottom-line expectations, the market response was less enthusiastic. Affirm stock dipped nearly 7% in Friday trading following the report.
Investors were likely spooked by forward-looking guidance, which anticipates a slowdown in gross merchandise volume (GMV) growth to 30% in Q3 and 25% in Q4. Even with a 36% year-over-year jump in GMV this past quarter, Wall Street remains wary of how long the consumer can keep up this pace.
The central question for investors remains whether Affirm is truly finding healthy consumers or is simply the last port of call for a cash-strapped public.
Levchin maintains that Affirm’s business model encompasses a “powerful defensive moat” that generic software-only competitors cannot replicate. He said that 96% of all transactions now come from existing consumers. To him, this high repeat-use rate proves that Affirm has moved beyond being a mere financial tool to becoming a primary consumer brand that stands to compete with giants like PayPal.
