Shopify, Six Months After Partnership, Affirm Makes $ 2 Billion on IPO

Shoppe founder and CEO Toby Lutke smiles after the company’s IPO on May 21, 2015 on the New York Stock Exchange.

Lucas Jackson | Reuters

Shopify just came off a huge growth year as the Kovid-19 epidemic grew into a massive increase in online shopping. It is now starting in 2021, the first notable tech IPO of the year, with a bang for an 8% stake in Afirm.

The two companies have seen their businesses grow since early last year, when Kovid-19 forced physical retailers to close, also encouraging consumers to shop online.

Shopify’s share price nearly tripled in 2020, as retail chains, restaurants and grocery stores turned to their software to create quick web storefronts, manage payments, and keep their businesses running. It has a market cap of over $ 140 billion. Affirm, established in 2012, with retailers offering consumer loans, allows buyers to pay in installments for items such as peloton bikes, Dyson vacuum cleaners and Oscar de la Renta handbags.

The two companies confirmed participation for online payments in July, becoming the exclusive provider or point-of-sale financing for Shop Pay, Shopify’s checkout service. As part of the deal, Shopify was granted a warrant to buy 20.3 million shares in Affirm.

With Affirm’s Nasdaq debut on Wednesday, Shopify’s stake is about $ 1.9 billion. Affirm jumped by 98% to $ 96.84 in early afternoon in New York.

With the partnership, Affirm offered Shopify’s new “Buy Now, Pay Later” service, called Shop Pay installments, which was launched for some US merchants late last year.

Affirm said in its prospectus that the Shopify deal allowed it to “significantly expand the number of merchants and consumers on our platform.” Shopify serves more than one million businesses, and in October said gross goods volume in the third quarter more than doubled to $ 9.9 billion from a year earlier.

At the time of the announcement, CEO and founder Max Levchin told CNBC that Shopify and Affirm would have a “very unified partnership” that allows merchants to “flip a switch” to get the product live.

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

Merchant diversification providing shopify is critical to Affirm, which counts on the peloton for 30% of revenue in the latest period.

But Shopify’s expansive customer base gained access at a fair price – Affirm gave Shopify the right to buy more than 20 million shares on each penny. A quarter of the shares issued in the original warrants vest in July. The remaining 15.2 million are vested with IPOs.

Shopify is the third largest shareholder of Affirm. The only big boss is founder and CEO Max Levchin, whose 11% stake is $ 2.7 billion, making him the latest member of the so-called “PayPal Mafia” to become a billionaire, and Jasmine Ventures, which is part of Singapore’s sovereign wealth The fund owns GIC and 9%.

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

Shares of Shopify were slightly changed on Wednesday, trading at $ 1,188.73.

Watch: Empower ‘Shop Pay’ installments to partners with Shopify


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