For his second "Executive Decision" segment of Thursday's Mad Money program, Jim Cramer spoke with Max Levchin, founder, chairman and CEO of Affirm Holdings (AFRM) , the buy now, pay later provider.
After a long decline, the shares spiked 23.3% Thursday after the company reported another quarter of strong results.
Levchin said consumers are still alive and well and are spending, and paying, according to Affirm's plan. "The business is performing very well," he said.
Affirm has a number of great partnerships, Levchin added. Their most recent tie-up with Shopify (SHOP) has been "fantastic," while older deals with Walmart (WMT) and Amazon (AMZN) also remain strong.
Levchin noted that Affirm has never charged consumers a penny in late fees or deferred interest, instead choosing to work out new payment plans for delinquent buyers.
When asked about investor fears that rising interest rates could derail Affirm, Levchin said the company's cost of capital is still lower than 2019 levels, and their delinquencies are also around 2019 levels.
OK, let's check on the charts.
In the daily bar chart of AFRM, below, we can see that the shares have been in a gut wrenching decline from November. Prices are rebounding a bit now but a lot of damage has been done and very little in the way of repair or new base building. Prices are trading below the declining 50-day moving average line but we could see a test of the underside of that line in the days ahead. The slope of the slower-to-react 200-day moving average line is negative.
The daily On-Balance-Volume (OBV) line has been weak for a long time telling us that sellers of AFRM have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish and pointed lower.
In the weekly Japanese candlestick chart of AFRM, below, we see a mostly bearish picture. The shares are in a downtrend and trade below the declining 40-week moving average line. The latest candle pattern shows a lower shadow telling us that finally after this long decline, traders are starting to reject the lows.
The weekly OBV line remains bearish for now. The MACD oscillator is bearish but the two moving averages are narrow and we could see a positive crossover in the weeks ahead.
In this daily Point and Figure chart of AFRM, below, we can see that the shares reached and exceeded a downside price target.
In this weekly Point and Figure chart of AFRM, below, the software is projecting the worst -- a downside price target of $0 -- zero. I am just the messenger.
Bottom-line strategy: AFRM got crushed and is now bouncing a bit. Without a bottom pattern in place I do not expect AFRM to rally for long or go very far. Only nimble and experienced traders should buy AFRM for a very short-term trade. The rest of us should remain on the sidelines.