Affirm Holdings, Inc. (AFRM) saw its stock price plummet by 5% during Tuesday's trading session, despite receiving positive analyst coverage and being highlighted as a top holding in a popular small-cap ETF. The sharp decline comes amid broader market volatility and growing concerns about the fintech sector.

TD Cowen initiated coverage on Affirm with a "buy" rating, noting that the company is well-positioned in the Buy Now, Pay Later (BNPL) space. The analyst cited Affirm's full-suite point-of-sale lending capability and consumer-friendly practices as key strengths. This positive initiation would typically be expected to boost investor confidence, making the stock's decline particularly noteworthy.

Adding to the surprising nature of the drop, Affirm was also mentioned as one of the top holdings in the Schwab U.S. Small-Cap ETF (SCHA), which is designed to provide broad exposure to the small-cap segment of the US equity market. Inclusion in such ETFs often leads to increased demand for a stock, yet this factor seems to have been overshadowed by other market forces driving the sell-off.

The stark contrast between the positive analyst sentiment and the stock's performance suggests that broader market concerns or sector-specific headwinds may be affecting investor sentiment towards Affirm. As the fintech industry faces increasing scrutiny and competitive pressures, investors appear to be reassessing their positions in companies like Affirm, despite individual positive catalysts.