Shopify earns $ 2 billion through IPP Affirm, six months after the partnership

Shopify has just come out of a huge year of growth, as the Covid-19 pandemic has spurred a massive increase in online shopping. Now begins 2021 with an explosion due to the 8% participation in Affirm, the first notable technological IPO of the year.

Both companies have seen their businesses explode since the beginning of last year, when Covid-19 forced retailers to close, giving consumers an even greater incentive to shop online.

Shopify’s share price nearly tripled in 2020, as retail chains, restaurants and grocery stores used its software to create fast web showcases, manage payments and keep their businesses running. Its market capacity exceeded $ 140 billion. Affirm, founded in 2012, works with retailers to provide consumer loans, allowing shoppers to pay in installments for items such as Peloton bicycles, Dyson vacuum cleaners and Oscar de la Renta handbags.

The two companies entered into a partnership in July for Affirm online lender to become the exclusive supplier or point-of-sale financing for Shop Pay, the Shopify purchasing service. As part of the transaction, Shopify received purchase orders of up to 20.3 million shares in Affirm.

With Affirm’s Nasdaq debut on Wednesday, Shopify’s stake is worth about $ 1.9 billion. Affirm has risen 98% to $ 96.84 since the early afternoon in New York.

With the partnership, Affirm became the provider of Shopify’s new “buy now, pay later” financing service called Shop Pay Installments, launched for some US merchants late last year.

Affirm stated in its prospectus that the Shopify agreement allowed it to “significantly expand the number of merchants and consumers on our platform”. Shopify serves more than one million companies and said in October that third-quarter gross volume of goods had more than doubled from a year earlier to $ 30.9 billion.

At the time of the announcement, CEO and founder Max Levchin told CNBC that Shopify and Affirm would have a “close integrated partnership” that would allow retailers to “change the switch” for the product to be active.

“We expect massive absorption,” Levchin said in an interview. “By making integration so easy, we expect it to be extremely close to total ubiquity.”

The diversification of merchants that Shopify offers is important for Affirm, which has accounted for Peloton for 30% of revenues recently.

But gaining access to Shopify’s extensive customer base cost a lot – Affirm gave Shopify the right to buy more than 20 million shares for a penny each. A quarter of the shares issued in the original mandate invested in July. The remaining 15.2 million was invested in IPOs.

Shopify is Affirm’s third largest shareholder. The only larger owners are founder and CEO Max Levchin, whose 11% stake is worth $ 2.7 billion, making him the latest member of the so-called “PayPal mafia” who became a billionaire and Jasmine Ventures, who is part of Singapore’s sovereign wealth. finances the GIC and holds 9%.

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

Shopify shares were slightly lower on Wednesday, trading at $ 1,188.73.

CLOCK: Affirm Shopify Partners to Provide Shop Pay Rates