Price Forecast:

Bullish Case: AFRM's strong partnerships with major retailers and rising consumer adoption suggest continued growth, supported by robust historical returns in favorable market conditions.

Bearish Case: Regulatory pressures and rising interest rates could significantly compress margins, posing risks to profitability, especially as market sentiment shifts toward caution regarding 'buy now, pay later' schemes.

Potential Outcomes:

• Strong user growth via retailer partnerships (60%)
• Regulatory headwinds hindering growth (30%)
• Increased competition negatively impacting margins (20%)
• Market volatility causing unexpected price corrections (40%)
• Consumer behavior shifts harming demand due to inflation (25%)

Trading Oracle: Adopt a tactical bullish debit spread: purchase $70 calls and sell $75 calls for December expiration. This strategy leverages current elevated implied volatility for potential upside while managing risk. Maintain a focus on volatility trends, adjusting positions as necessary to capture volatility skew.

November 26, 2024