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Shopify makes $ 2 billion on Affirm IPO, six months after the partnership

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

Lucas Jackson | Reuters

Shopify just got out of a giant growth year when the Covid-19 pandemic spurred massive growth in online shopping. Now it starts 2021 with a bang thanks to an 8% stake in Affirm, this year̵

7;s first notable IPO.

Both companies have seen their business explode since the beginning of last year, when Covid-19 forced physical retailers to close, giving consumers even more incentive to shop online.

Shopify’s stock price nearly tripled in value by 2020, as retail chains, restaurants and grocery stores turned to its software to create fast webshop fronts, manage payments and keep their business running. Its market value has exceeded $ 140 billion. Founded in 2012, Affirm works with retailers to offer consumer loans so buyers can pay for items like Peloton bikes, Dyson vacuum cleaners and Oscar de la Renta handbags in installments.

The two companies entered into a partnership in July that made the online lender Affirm the exclusive provider or financing point for Shop Pay, Shopify’s checkout service. As part of the agreement, Shopify was granted warrants to purchase up to 20.3 million shares in Affirm.

With Affirm’s Nasdaq debut on Wednesday, Shopify’s share is approx. Worth $ 1.9 billion. Confirmation jumped 98% to $ 96.84 from early afternoon in New York.

With the partnership, Affirm became the provider of Shopify’s new “buy now, pay later” financing service called Shop Pay Installments, which was launched to some US merchants late last year.

Affirm said in its prospectus that the Shopify agreement allowed it to “significantly expand the number of merchants and consumers on our platform.” Shopify serves more than a million businesses and said in October that third-quarter grossing goods more than doubled from a year earlier to $ 30.9 billion.

At the time of the announcement, CEO and founder Max Levchin told CNBC that Shopify and Affirm will have a “closely integrated partnership” that lets merchants “turn a switch” to get the product going live.

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

The trade diversification that Shopify provides is important to Affirm, which accounted for Peloton for 30% of revenue in the most recent period.

But gaining access to Shopife’s expansive customer base came at a steep price – Affirm gave Shopify the right to buy over 20 million shares for a penny each. A quarter of shares issued in the original warrant granted in July. The remaining 15.2 million will be allocated to the IPO.

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

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

Shopify shares changed slightly on Wednesday, trading at $ 1,188.73.

CLOCK: Confirm partner with Shopify to operate ‘Shop Pay’ payments

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