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Why the Sezzle share price is up 5% today

The Sezzle Inc. Ltd (ASX: SZL) share price has rocketed 5% higher today as the company looks to fuel its growth with new debt capital.

Why is the Sezzle share price worth watching?

Sezzle has secured a US$100 million (A$147.8 million) debt funding facility from a syndicate of lenders.

This is more than triple the company’s previous US$30 million credit facility as it looks to continue its strong growth.

Sezzle’s buy now, pay later business model requires significant capital to pay retail merchants ahead of collecting the payment instalments from the end consumer.

The group’s underlying merchant sales for the 12 months to 30 September 2019 totalled US$157.5 million. The upgrade in its debt funding will allow Sezzle to build out its sales and “aggressively grow” the business.

The new facility is also on “super terms” to the previous facility, according to CFO Karen Hartje.

How has Sezzle performed on the ASX this year?

Sezzle listed on the ASX on 30 July at $1.22 per share and has rocketed to its current $2.52 per share valuation in the space of a few months.

The Sezzle share price nearly doubled on its first day of trading to close at $2.39 per share. It’s been a volatile few months from there and the company’s shares have moved beyond that mark this morning.

Sezzle’s market cap has swelled to $198 million but remains well shy of fellow buy now, pay later companies Zip Co. Ltd (ASX: Z1P) and Afterpay Touch Group Ltd (ASX: APT).

Zip shares have rocketed 256.36% higher since the start of January, which makes Afterpay’s 163.33% gains look very pedestrian.

Zip has a market cap of $1.46 billion while Afterpay boasts an impressive $8.2 billion valuation after its bullish run in 2019.

The buy now, pay later companies have performed well this year, with valuations soaring despite a Senate inquiry casting a cloud of the industry’s future regulation.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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