Crypto Crash: 1 Growth Stock to Buy Instead

While it has been a year of mas­sive gains for many pop­u­lar cryp­tocur­ren­cies, some of the hottest tokens are set to end 2021 in retreat. 

From their all-time high prices sert ear­li­er this year, meme tokens Shi­ba Inu ( SHIB 1.52% ) and Doge­coin ( DOGE 14.17% ) are down 59% and 77%, respec­tive­ly. Even cryp­to cham­pi­on Bit­coin ( BTC 0.34% ) has been caught up in the crash and is down rough­ly 29%. 

Image source: Get­ty Images.

To date, Bit­coin has always found a way to even­tu­al­ly recov­er, but his­to­ry sug­gests recent crowd favorite Shi­ba Inu might nev­er reclaim its pre­vi­ous highs. Doge­coin, which is sim­i­lar to Shi­ba Inu in con­cept and spec­u­la­tive fer­vor, hit $0.73 per token back in May, and it has head­ed south ever since, set­tling around $0.16 and leav­ing many investors under­wa­ter on their holdings. 

Few merchants really want to accept cryptocurrencies

One of the sell­ing points of cryp­to has been the poten­tial for it to even­tu­al­ly replace tra­di­tion­al mon­ey, but the evi­dence right now seems to favor a dif­fer­ent trend. Bit­coin, the token most wide­ly accept­ed as pay­ment by busi­ness­es, only has about 7,650 mer­chants will­ing to accept it as a pay­ment option. Busi­ness­es have an even small­er appetite (tiny, in fact) for accept­ing Shi­ba Inu and Doge­coin. A mere 386 mer­chants take Shi­ba Inu, and 1,972 take Doge­coin. This com­par­i­son gives some cre­dence to the idea that Bit­coin (and cryp­tocur­ren­cies gen­er­al­ly) are more vehi­cles for spec­u­la­tion rather than pay­ment solutions.

Con­sid­er­ing its lim­it­ed use case right now, Bit­coin’s $925 bil­lion mar­ket cap­i­tal­iza­tion does­n’t make a whole lot of sense. A bet­ter alter­na­tive in this con­text is pay­ments com­pa­ny Affirm ( AFRM ‑4.02% ), which serves 102,000 busi­ness­es with its buy now, pay lat­er busi­ness and is val­ued at just $32 bil­lion. It also hap­pens to be a rev­enue-gen­er­at­ing enterprise. 

The stock you should buy instead

There’s a good rea­son I men­tioned Affirm ear­li­er. It’s now the world’s largest stand­alone buy now, pay lat­er com­pa­ny, and it just signed a block­buster deal with e‑commerce giant Ama­zon ( AMZN ‑1.05% ). That’s on top of an already lucra­tive part­ner­ship it has with Shopi­fy ( SHOP ‑4.00% ), which serves over 1.7 mil­lion merchants. 

“Buy now, pay lat­er” is an inno­v­a­tive twist on install­ment-based lend­ing. Affir­m’s tech­nol­o­gy inte­grates with the online check­out of its mer­chant part­ners, allow­ing con­sumers to make pur­chas­es using a loan with no mon­ey down. 

It’s dif­fer­ent from oth­er con­sumer finance prod­ucts like cred­it cards, because there’s no lengthy approval process, and buy now, pay lat­er loans are typ­i­cal­ly short-term. Affirm seeks full repay­ment with­in three, six, or 12 months, where­as cred­it cards are com­plete­ly open-end­ed. Affir­m’s inter­est rates are also more flex­i­ble, depend­ing on the cus­tomer’s cred­it­wor­thi­ness, rang­ing from 0% to 30%. And since the con­sumer locks in the loan term and inter­est rate at pur­chase, they know exact­ly what the repay­ments are ahead of time. 

Affirm had 8.7 mil­lion active cus­tomers as of the recent first quar­ter of fis­cal 2022, but its mar­ket oppor­tu­ni­ty is about to explode. 

Walking with giants

Ama­zon is respon­si­ble for up to half of all online sales in the U.S., which means Affirm has poten­tial­ly locked up 50% of its address­able mar­ket with just this sin­gle deal. Affirm financed $8.3 bil­lion worth of con­sumer pur­chas­es in fis­cal 2021, and with the addi­tion of Ama­zon and Shopi­fy com­bined, that address­able mar­ket could bal­loon to over $600 bil­lion per year. 

But what’s poten­tial­ly more lucra­tive over the long term is the cus­tomer pool Affirm will have access to. Ama­zon and Shopi­fy togeth­er serve over 300 mil­lion mem­bers on their plat­forms, which offers Affirm an oppor­tu­ni­ty to grow by 3,300% from the 8.7 mil­lion cus­tomers it has today. 

It’s a lev­el of adop­tion that com­plete­ly dwarfs all exist­ing cryp­tocur­ren­cies com­bined, let alone just the three pop­u­lar ones men­tioned above, and Affir­m’s rev­enue growth offers just anoth­er rea­son to buy its stock instead:

Data source: Affirm 

The $1.24 bil­lion in esti­mat­ed fis­cal 2022 rev­enue is based on up to $13.38 bil­lion in gross mer­chan­dise val­ue (the vol­ume of pur­chas­es financed by Affirm) — and it does­n’t account for any con­tri­bu­tion from the new Ama­zon deal. There­fore, there’s a pos­si­bil­i­ty this guid­ance could be blown out of the water. 

For investors hold­ing onto cryp­tocur­ren­cies that are strug­gling right now, it might be ben­e­fi­cial to diver­si­fy into a high-growth stock like Affirm. It gen­er­ates real rev­enue, and it has a vote of con­fi­dence from some of the world’s largest com­pa­nies. It’s a reach that most tokens are unlike­ly to ever expe­ri­ence, if results so far are any indication.