American-based buy now, pay later provider Sezzle Inc (ASX: SZL) has seen its share price rise more than 1,000% since the March market meltdown this year. This rise comes as the rapidly growing company has achieved an increasing number of users on its payments platform, along with higher revenue and more merchants offering payment through Sezzle.
What's behind the higher Sezzle share price?
It's no secret that there has been a giant move toward online shopping as a result of coronavirus shutdowns. No doubt this has been a major contributor to Sezzle's spectacular growth. Underlying merchant sales in April were $57.9 million, which was a record for the company. Additionally, Sezzle reported this month that the underlying merchant sales pace for May was higher than for April.
Another record reached in April was the number of customers who signed up to the Sezzle platform. In April, Sezzle added 114,400 active customers – more than the whole of the first quarter of 2020. The company also saw over 1,100 active merchants added in April. This means that Sezzle now has a total of almost 15,000 merchants offering payment through its platform.
The record growth experienced by Sezzle means that it is getting closer to generating profits for shareholders. In the 2019 financial year, Sezzle had earnings before tax interest depreciation and amortisation of -US$10.7 million. However, earnings could turn positive as more users sign up to the platform and the margins gained from transactions grow.
Sezzle as a public benefit corporation
In addition to generating profits, Sezzle aims to appeal to ethical consumers and investors. It has officially become a public benefit corporation (PBC). A PBC is a type of corporation that includes working for the public benefit and supporting the community at large to be written into its charter, in addition to the traditional corporate goal of maximising profit for shareholders. This makes Sezzle the first PBC in the buy now, pay later industry.
Sezzle aims to benefit consumers by helping them to become financially empowered. It also undertakes additional initiatives by making donations to charity and supporting minority-owned businesses. Further, Sezzle is set to release a financial education portal, which could both help its existing customers and build awareness among new customers.
Should you invest in Sezzle?
At the time of writing, the Sezzle share price is $4.05, which is up 1,057% since its 52-week low of $0.35 reached in March. Since the beginning of January, the Sezzle share price has returned 144%.
Sezzle shows great promise as a buy now, pay later provider in the giant North American retail market. If its current growth trends continue, it could one day make huge profits. Additionally, the fact that Sezzle is a PBC may help it to avoid potential regulatory pitfalls that could trip up other industry players. For those looking to invest in the buy now, pay later industry, I think Sezzle could be a great choice.
