10 Worst High-Risk High-Reward Growth Stocks To Buy

5. Affirm Holdings, Inc. (NASDAQ:AFRM)

Beta (5Y Monthly): 3.64

3-Year Sales Growth: 35.61%

Number of Hedge Fund Holders: 61

Analyst Upside Potential: 68.89%

Affirm Holdings, Inc. (NASDAQ:AFRM) operates as a financial technology company specializing in buy now, pay later solutions and related financial services. Its platform allows users to split purchases into interest-free installments or monthly payments with interest rates ranging from 0% to 36%.

On March 19, Goldman Sachs analyst Will Nance maintained a Buy rating on the stock, with a price target of $56. The company had a long-standing partnership with Walmart since 2019, allowing customers to split purchases into installments at Walmart stores and online. However, recently Klarna, one of the competitors of Affirm Holdings, Inc. (NASDAQ:AFRM) has replaced the company as Walmart’s exclusive installment loan provider. The analyst noted that Walmart contributed 5% to the company’s Gross Merchandise Volume and 2% of adjusted operating income over six months ending December 2024. This smaller-than-anticipated reliance reduces the immediate financial risk of losing exclusivity to Klarna.

Moreover, the partnership with Walmart faced lower profitability due to underwriting complexity and other commercial terms. Therefore despite the anticipated challenges due to the ending of this partnership, Goldman Sachs raised the company’s rating. The revised outlook reflects reduced operating income headwinds and confidence in the company’s ability to offset losses through diversified partnerships. It is one of the worst high-risk high-reward growth stocks to buy.