According to Morgan Stanley, it’s time to skip Affirm following disappointing earnings results this week. Analyst James Faucette downgraded the online payment stock to balance from overweight, saying Affirm’s offering is too narrow. He also lowered his price target to $15 a share from $46. The new target implies a gain of more than 12%. “BPNPL [Buy Now, Pay Later] can be a great way to provide younger consumers and those with limited credit histories with access to purchase credit, and Affirm’s BNPL structure helps establish debt repayment behavior and discipline ,” Faucette wrote in a Friday note. “However, by limiting the BNPL offering and developing products with features that are significantly different (e.g. Debit+) from what has been widely accepted by the market (i.e. revolving credit), the challenges to customer education and adoption will increase,” added Faucette. premarket on Friday AFRM Mountain 1D AFRM reduction The downgrade comes after Affirm announced Wednesday that it will cut 19% of its workforce, with CEO Max Levchin saying in a statement. message to employees that the company “consciously recruited in advance the revenue needed to support the size of the team” However, he said “things changed in the middle of the year.” 2022″ as rising interest rates and slowing consumer spending boosted Affirm’s borr costs. indebted. Levchin writes: “The root cause of where we are today is that I acted too slowly when these macroeconomic changes took place. Furthermore, Affirm missed analysts’ expectations for both earnings and margins in its second-quarter earnings report. “We think Affirm’s broad ambitions will limit its potential, compounded in the short term by the adverse impact of a poor credit cycle and the need to build rates and prices,” Faucette writes. new interest rate ceiling”. “We think a better, more effective strategy would be to use BNPL to attract customers for initial deals and then move the best customers to traditional credit products (eg. : credit card) as soon as possible, then use incentives like modified credit lines and universal acceptance to encourage increased participation,” he added. The stock claims to have come under increasing pressure since the company went public in January 2021. The stock ended its first year of trading on the Nasdaq at $100.56. By 2022, however, the stock is down 90%. Since then, it has recovered somewhat, growing 37% in 2023. Affirm did not immediately respond to CNBC’s request for comment. —CNBC Michael Bloom and Lauren Feiner contributed to this report.