Why the Sezzle share price has rocketed 18% this week

Sezzle sizzled this week after an exciting new partnership.

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asx share price movement represented by blue graphic containing words buy now pay later

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At the time of writing, the Sezzle Inc (ASX: SZL) share price has gone up 18% this week after the buy now, pay later business revealed an exciting update to the market.

Sezzle partnership

Sezzle informed the market that it has concluded its proof of concept (POC) with Target Corporation (NYSE: TGT), one of the largest omnichannel retailers in North America.

The buy now, pay later business has entered into a three-year agreement with the retailer.

Under the agreement, Sezzle’s product will be used in-store and across Target’s digital platforms, providing guests with access to interest-free payment plans for purchases made at Target.

What else has happened recently?

Near the end of May, Sezzle revealed that it had partnered with Lamps Plus, the US’ largest specialty lighting retailer. As part of the initial roll out, Lamps Plus is now offering Sezzle exclusively as a flexible payment option to its online customers at its website who can choose to pay for products in four interest-free instalments over six weeks with no impact to their credit score. Lamps Plus has a “thriving” e-commerce business with 36 stores in the west of the country.

The company also announced its intention to file the registration statement for an initial public offering (IPO) in the US.

First quarter of 2021

At the end of April 2021, it released the results of its first quarter numbers for the three months to 31 March 2021.

In that quarter, underlying merchant sales (UMS) increased 214.1% year on year to US$375.1 million. That was an increased of 16.9% quarter on quarter.

Sezzle income, as a percentage of UMS, remained steady at 5.9% compared to the prior corresponding period.

Almost 400,000 active consumers were added during the quarter, bringing the total to over 2.6 million active consumers – up 126.6% year on year. It also added 7,300 active merchants, the largest quarterly increase in the company’s history.

Sezzle’s consumer profile continued to improve as active consumer repeat usage grew to 90.7%. That was the 27th consecutive month of improvement.

The company is expecting improved margins as more of its payment volumes move towards the automated clearing house as a payment method.

Broker opinion on the Sezzle share price

Broker Ord Minnett was impressed by Sezzle’s quarterly numbers, particularly the UMS, average usage of consumers and income.

Ord Minnett has set a price target of $11.90 on the buy now, pay later business. That suggests a potential rise of more than 30% over the next 12 months.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Sezzle Inc. 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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