Written by Brenda Nakalema

Apple’s Buy Now, Pay Later Plans Sank Affirm Stock. This Might Not Be Bad News. Here’s Why.

Affirm Holdings (ticker: AFRM) stock dived on Monday after Apple (ticker: APPL) announced its decision to step into the buy …

Affirm Holdings (ticker: AFRM) stock dived on Monday after Apple (ticker: APPL) announced its decision to step into the buy now, pay later industry, which has set the market players at attention.

However, Apple’s foray into BNPL may not be the strong headwind for Affirm (ticker: AFRM) that most investors were anticipating. Indeed, the launch of Apple Pay Later might instead serve as a “broader catalyst” for further industry growth, commented a team of analysts at KeyBanc Capital Markets.

Through the Wallet app on the iPhone, Apple plans to manage its new product. Consumers will thus have the option to split the cost of an item they buy using Apple Pay into four equal payments over a period of six weeks.

“We see Apple’s immense scale as a potential important accelerator for the broader industry adoption as we see in-store as a next major leg of industry growth,” they said.

According to the analysts, the BNPL market could reach roughly $200 billion in gross merchandise value by 2025 in the U.S. Apple could be an important catalyst of that growth as Apple Pay Later could increase awareness among Apple’s millions of consumers and drive adoption of an “early-stage market”, they added.

However, Affirm might still have to deal with a host of investor concerns in the short-run. Last month, J.P Morgan initiated coverage of the stock with a Neutral rating, saying that although the company was a disrupter in the space, it faced stiff competition that could eventually stunt its growth.

Shares of affirm were falling 2.8% in premarket trading on Tuesday. The stock ended 5.5% lower on Monday after Apple’s announcement and has lost nearly 76% this year alone.