Shares of online lender Affirm more than doubled in their first day of trading Wednesday as the first major IPO of the year rode a wave of investor enthusiasm for its “buy now, pay later” model.

The stock rose as much as 109% to $102.27 before falling back to $97.17, a 98.3% gain on the IPO price of $49. The post-IPO leap gave Affirm a market cap of nearly $24 billion based on shares sold in the offering, which raised at least $1.2 billion.

“Affirm’s listing extended a frenzied run of tech IPOs dating back to the second half of last year, while delivering a second big win for [Affirm CEO] Max Levchin almost two decades after he helped to take PayPal public,” the Financial Times said.

As CNBC reports, Affirm “has become prominent in the ‘buy now, pay later’ space that offers point-of-sale loans.” The company offers financing for online purchases that can be paid back in monthly installments without accruing compounding interest, receiving compensation from merchants when customers opt for a lending option.

“Our goal is to be a viable alternative to credit cards,” Levchin told CNBC ahead of the company’s first trade.

Affirm ‘s biggest customer is fitness equipment maker Peloton, which accounted for about 28% of its $509.5 million in revenue in its latest fiscal year, up from $264.4 million a year earlier. It posted a net loss of $112.6 million, compared with a loss of $120.5 million in the year-prior period.

The company has been growing its merchant base, which now includes more than 650,000 brands, partnering with businesses like Walmart and David Yurman that incorporate in-store financing elements alongside online ones.

According to Business Insider, Affirm’s interest rates reach as high as 30%, though around 40% of its customers pay no interest at all. The fees it charges to merchants can be as high as 7%.

“A boom in the business of online consumer lending means Affirm faces competition from overseas groups such as Afterpay and Klarna, as well as PayPal, which introduced a buy now, pay later offering last year,” the FT said.

 

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