Is the Sezzle (ASX:SZL) share price a beaten-up buy?

Could the Sezzle share price be an opportunity after dropping by a third over the last two months?

| More on:
A man tuches his finger to a cyber payment screen indicating a wider range of shopping options

Image source: Getty Images

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.

Should you invest $1,000 in Sezzle right now?

Before you consider Sezzle, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Sezzle wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on BNPL shares

Upset woman with her hand on her forehead, holding a credit card.
BNPL shares

Why is the Sezzle share price tumbling 8% on Wednesday?

Why are Sezzle shares getting singled out for a thrashing today?

Read more »

Zip share price Z1P A wide-eyed man peers out from a small gap in his black zipped jumper conveying fear over the weak Zip share price
BNPL shares

It’s happened: Zip share price tumbles below $1 for first time since 2018

ZIP shares have fallen below the psychological $1 barrier.

Read more »

woman using affirm to pay
BNPL shares

Over 20 million new Zip shares will soon be available to trade. What does this mean for the share price?

Could the Zip share price soon take another hit?

Read more »

woman thing about her payment
BNPL shares

Why is the Zip share price making a partial recovery this afternoon?

The BNPL stock dodged hitting its 52-week low on Friday – just.

Read more »

Scared looking people on a rollercoaster ride, just like the Afterpay share price in recent months.
BNPL shares

ASX BNPL share Splitit sinking 11% on rollercoaster day

Shares in the payment solution provider are up and down like a yo-yo today...

Read more »

A group of friends split the bill at the restaurant after their meal, making payments on their mobile phones.
BNPL shares

Guess which ASX BNPL share has soared 100% in a month. Hint: it’s not Zip

Could this be the new buy now, pay later darling of the ASX?

Read more »

Sad woman with her hand on her head and holding a credit card.
BNPL shares

The Zip share price is plunging 9% today. Here’s why

Zip shares are getting smashed today. Here's why.

Read more »

A young woman in a retail shop holding her wallet open ready to pay for her items using Afterpay
BNPL shares

Back in the green: Zip share price launches 6% on Tuesday

It's a good day for the ASX tech sector.

Read more »