3 reasons to consider Sezzle (ASX:SZL) at this share price

There are some compelling reasons why it could be worth considering Sezzle Inc (ASX:SZL) at this share price, including the growth.

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There are some compelling reasons why you might want to think about Sezzle Inc (ASX: SZL) at this share price.

What’s Sezzle?

Sezzle describes itself as a rapidly growing fintech company on a mission to financially empower the next generation. It offers interest-free instalment plans at online stores and certain in-store locations.

The company claims that the increase in purchasing power for consumers leads to increased sales and basket sizes for the merchants that offer Sezzle.

It’s one of several buy now, pay later (BNPL) players on the ASX including Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and Splitit Ltd (ASX: SPT).

3 reasons to consider Sezzle at this share price

1: It has been declining

It’s better for investors to pay a lower price than a higher price for the same business.

Since 25 January 2021, the Sezzle share price has fallen by 9.5%. That’s a sizeable drop over such a short period of time.

Sezzle shares have also fallen by 29% since 28 August 2021, though that price peak was only for a short period of time.

As legendary investor Warren Buffett once said about share declines: “When hamburgers go down in price, we sing the Hallelujah Chorus in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will buy except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.”

2: Delivering growth

Sezzle is one of the ASX shares that is delivering enormous revenue growth every quarter despite COVID-19 impacts.

It recently revealed its growth for the fourth quarter of 2020.

With underlying merchant sales (UMS), it said there was growth of 40.6% quarter on quarter and 205.4% year on year to US$320.8 million.

The average monthly UMS reached US$106.9 million, which was also an increase of 40.6% quarter on quarter and up 205.4% year on year.

Looking at Sezzle’s own income, merchant fees grew by 32.6% quarter on quarter and 195.6% year on year to US$17.2 million. However, the merchant fees as a percentage of UMS declined by 18 basis points year on year to 5.4%. The BNPL company says that is because it’s working with bigger merchants on slightly lower margins. 

The number of active consumers and active merchants increased significantly. The number of active consumers rose by 143.9% year on year to 2.23 million. Active merchants grew even quicker, rising by 166.6% to 26,690.

Sezzle reported that its active consumer repeat usage improved to 89.8%, which was up 75 basis points quarter on quarter and up 608 basis points year on year.

Sezzle executive Chair and CEO Charlie Youakim said: “Our efforts toward large enterprise merchants is paying dividends, as evidenced by our recent addition of GameStop and a number of mid-sized merchants such as UNTUCKit, Thursday Boots, Galls, Guidefitter and Pure Hockey.”

3: Exposure to the large addressable market of the US

Sezzle is focused on the US market, which has a much bigger population and addressable market than Australia. It has a sizeable market opportunity there.

Its instalment option went live in November with e-commerce platform Wix. The company’s integration is available to all Wix users in the US, Canada, India and in future regions as Sezzle expands.

However, the US is also where there is a lot of competition in the space from players like Afterpay. So the expansion into Canada and India maybe benefit the company over the long-term.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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