Is the Sezzle Inc (ASX: SZL) share price a beaten-up buying opportunity after falling by 33% over the last two months?
Investors often like to base their valuation thoughts on a business' performance. The last time investors got a look at Sezzle was in reporting season last month.
The August update
The business reported that for the six months ending 30 June 2021 it saw revenue increase 159% to US$53.9 million. But the net loss worsened by 271% to US$30.4 million.
For the second quarter of FY21, it saw its underlying merchant sales (UMS) rise to US$411.1 million. That was a year on year increase of 118.7%. In quarter on quarter terms, that was an increase of 9.6% for UMS.
Total income as a percentage of UMS was 6.8% in the second quarter of FY21, the same as the first quarter of FY21. It was up from the second quarter of FY20 where it was 6.7%.
Sezzle explained that this growth was driven by growth of active consumers, active merchants and repeat usage.
Active consumer repeat usage grew to 91.6% in June 2021, which was the 30th consecutive month of improvement.
The top 10% of Sezzle's consumers, based on UMS, transact approximately four times a month.
Management also revealed progress in July 2021, which may have had an influence on the Sezzle share price.
The executive Chair and CEO of Sezzle, Charlie Youakim said:
Our strong momentum continued after quarter end, as July represented a new monthly active high in UMS (US$150.6 million), we crossed over the 3 million active consumers mark and we are now engaged with 41,800 active merchants on the Sezzle platform. Our scale and positive market positioning, as a public benefit corporation and B Corp, are resonating with consumers and merchants alike. We are also excited about the partnerships we are creating, such as the recent agreement with and investment from Discover Financial Services and e-commerce platform, BigCommerce, naming Sezzle as its preferred buy now, pay later partner.
Is the Sezzle share price a buy?
Sezzle says that it has large upside potential because of the low BNPL penetration of e-commerce, representing 1.6% in North America. New product verticals are seeing increased user and merchant demand for BNPL offerings.
It's expanding into new categories such as health, electronics and travel.
Sezzle is also expanding geographically. It launched in Canada in 2019 and it also notes positive trends in India, favourable cross-border discussions in Europe and it's in the early stages of entering Brazil. It launched in India in July 2020 and in started in Brazil in April 2021.
The broker Ord Minnett currently rates the Sezzle share price as a buy with a price target of $10. That implies that Sezzle shares could rise around 50% over the next year, if the broker is right.
