Affirm Slips on Plans to Raise $1.25 Billion in Convertible Notes

Affirm stock (NASDAQ:AFRM) fell nearly 4% Thursday as the company said it will sell $1.25 billion in convertible notes to support its growth plans.

Affirm, a buy now, pay later financial company, said the money from the issue could go into working capital, capital spending and associated investments.

The parties to the offering will have the option to buy more paper worth $187.5 million within 13 days of the first issue.

The notes will mature on November 15, 2026, the company said.

Affirm may redeem for cash all or any portion of the notes after November 20, 2024, but only if the share price exceeds 130% of the conversion price for a specified period of time.

As the name suggests, a convertible note, while being debt to start with, can be converted into stock. Investors don’t always take kindly to issue of convertible notes, because the issue of new stock ultimately depresses earnings per share.