Shares of Affirm Holdings, Inc. AFRM dropped 4.2% yesterday as Swedish fintech Klarna announced it will be the exclusive provider of buy now, pay later (BNPL) loans for Walmart Inc. WMT in the United States this year. The news comes alongside Klarna’s recent IPO filing, signaling its intent to go public on the New York Stock Exchange under the ticker "KLAR." The company is reportedly aiming to raise over $1 billion at a valuation of more than $15 billion.

As part of the Walmart deal, Klarna will integrate its BNPL services with OnePay, a Walmart-backed fintech firm co-funded by Ribbit Capital. OnePay is already available at Walmart’s physical and online checkouts. Additionally, Klarna recently entered an agreement enabling OnePay to pick up 15.3 million shares in the Swedish payments company, per Bloomberg.

Under this partnership, Klarna’s installment loan options will be fully integrated into Walmart checkouts. Approved customers will be able to select repayment terms ranging from three months to three years and manage their loans through the OnePay app.

Currently, Affirm is a Walmart BNPL partner, but Klarna will be the exclusive provider once the transition is completed. Per Bloomberg, Affirm noted that its Walmart partnership accounted for approximately 5% of its GMV and 2% of its adjusted operating income in the second half of last year. However, the company emphasized that its BNPL services remain available through direct-to-consumer channels, including the Affirm Card.

AFRM’s Price Performance

Over the past year, shares of Affirm have gained 40.2% compared with the 8.6% growth of the industry it belongs to.

Image Source: Zacks Investment Research

Zacks Rank & Other Key Picks

Affirm currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the broader Business Services space are Remitly Global, Inc. RELY and PAR Technology Corporation PAR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Remitly Global’s current-year earnings indicates a 110.5% improvement from the year-ago level. RELY beat earnings estimates in each of the trailing four quarters, with the average surprise being 58.8%. The consensus estimate for current-year revenues is pegged at $1.57 billion, suggesting 24% year-over-year growth.

The Zacks Consensus Estimate for PAR Technology’s current-year earnings indicates a 115.1% year-over-year improvement. PARbeat earnings estimates in two of the trailing four quarters and missed twice, with the average surprise being 18.6%. The consensus estimate for current-year revenues implies a 16.9% year-over-year increase.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Walmart Inc. (WMT) : Free Stock Analysis Report

PAR Technology Corporation (PAR) : Free Stock Analysis Report

Remitly Global, Inc. (RELY) : Free Stock Analysis Report

Affirm Holdings, Inc. (AFRM) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research