Needham & Company upgraded Affirm to Buy, citing the potential impact of the company's application for a bank license. Analyst Kyle Peterson believes this move could be a “game-changer,” significantly altering Affirm’s funding model and long-term earnings potential. The firm has set a $100 price target for the stock, signaling confidence in its future growth trajectory.

Affirm is seeking to establish Affirm Bank, an industrial loan company, through applications to the Nevada Financial Institutions Division and the FDIC. The new entity would be led by John Marion, a banking veteran. Needham anticipates approval, given the current administration's deregulation push. This transition could lead to reduced funding costs.

The biggest financial benefit, according to Needham, stems from lower funding costs as Affirm shifts away from more expensive warehouse and securitization lines. They estimate that FDIC-insured deposits could be significantly cheaper, potentially boosting GAAP EPS by over 35%. A banking license could also accelerate product development.