Shopify Earns $ 2 Billion in Affirm IPO Six Months After Partnership

Shopify’s founder and CEO, Tobi Lutke, smiles after an IPO on the New York Stock Exchange on May 21, 2015.

Lucas Jackson | Reuters

Shopify has entered a year of great growth as the Covid-19 pandemic has spurred significant growth in online shopping. It is now a huge success in 2021, thanks to an 8% stake in Affirm, the first notable technology IPO of the year.

Since the beginning of last year, when Covid-19 was forced to close its physical stores, the two companies have exploded their businesses, giving consumers more incentives to shop online.

Shopify’s share price will almost triple in 2020 as retail chains, restaurants and grocery stores use software to create rapid web storefronts, manage payments and keep their businesses running. I did. Its market capitalization is over $ 140 billion. Founded in 2012, Affirm has partnered with retailers to offer consumer loans, allowing buyers to pay in installments for items such as Peloton bikes, Dyson vacuum cleaners and Oscar de la Renta handbags.

In July, the two companies formed a partnership for online lender Affirm to become the exclusive provider or POS finance provider for Shopify’s checkout service, ShopPay. As part of the deal, Shopify was granted a warrant to buy up to 20.3 million shares of Affirm.

With Affirm’s debut on Wednesday at Nasdaq, Shopify’s stock is worth about $ 1.9 billion. Early in the afternoon in New York, it surged 98% to $ 96.84.

This partnership makes Affirm a new “buy now, pay later” financial services provider for Shopify. It’s called Shop Pay Installations, which was launched for some US merchants late last year.

In the prospectus, Shopify’s deal asserted that “we were able to significantly increase the number of merchants and consumers on our platform.” Shopify serves more than a million companies and said its total merchandise volume in the third quarter of October more than doubled from the previous year to $ 30.9 billion.

At the time of the announcement, CEO and founder Max Levchin told CNBC that Shopify and Affirm have a “tightly integrated partnership” that allows merchants to “switch on” the product.

“We look forward to a major uptake,” Levtin said in an interview. “We hope that by making the integration very easy, it will be very close to full ubiquitous.”

The diversification of merchants offered by Shopify is important for Affirm, who had expected Peloton to generate 30% of its revenue over the last period.

However, accessing Shopify’s vast customer base was expensive. Affirm has given Shopify the right to buy more than 20 million shares in a penny. A quarter of the shares issued in the original warrant were vested in July. The remaining 15.2 million are entitled to an IPO.

Shopify is Affirm’s third largest shareholder. The only major owner is founder and CEO Max Levchin, whose 11% stake is worth $ 2.7 billion, making him the latest member of the so-called “PayPal Mafia” and a millionaire. Jasmine Ventures, which is part of Singapore’s government assets, also funded GIC and owns 9%.

The next top holders are Lightspeed Venture Partners, Peter Thiel’s Founders Fund and Kosla Ventures.

Shopify’s share price remained almost unchanged on Wednesday, trading at $ 1,188.73.

to see: Make sure to partner with Shopify to enhance ShopPay installments

Shopify Earns $ 2 Billion in Affirm IPO Six Months After Partnership

Source link Shopify Earns $ 2 Billion in Affirm IPO Six Months After Partnership

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