The Sezzle Inc (ASX: SZL) share price dropped by 13% in September 2021. Could the buy now, pay later business now be a buy?
In-fact, it has fallen 32% since the middle of August 2021 and 43% from 8 July 2021.
The company itself didn't make any market sensitive announcements during September, though it was announced that Sezzle would be entering the S&P/ASX 300 Index (ASX: XKO).
Sezzle's FY21 half-year result
The latest insight that the business given to the market has been its half-year result which it released in August 2021.
Sezzle reported a lot of growth. Its underlying merchant sales (UMS) increased 156% to US$786.2 million. Active merchants also increased by 150% to 40,274. The active consumers grew 96% to 2.88 million.
Repeat usage by customers was one of the factors that benefited the overall result. In the first six months of FY21 saw the repeat usage increase by 4.1 percentage points from 87.5% to 91.6%. June 2021 was the 30th consecutive month of improvement of this statistic.
The top 10% of Sezzle's consumers, based on UMS, transact 49 times per year.
All of the above growth led to total income increasing 159% to US$53.9 million.
Sezzle has been winning larger enterprise merchant partners, such as wins like Target, Lamps Plus and Market America Worldwide.
International growth plans
One of the factors that may influence the future Sezzle share price is its growth plans internationally.
Management said that global expansion remains a priority for the company. It launched operations in Canada in 2019, commenced operations in India and certain countries in Europe in 2020, and are currently in the early stages of expansion into Brazil. It says that will continue to extend its platform into attractive geographies that are "ripe for adoption".
So far it has focused on entering new markets organically rather than through acquisitions. Its approach involves identifying a "strong, local entrepreneurial team" to lead its expansion. However, this may require significant additional capital to implement its international expansion plans.
Other growth areas
The company has seen growth into a number of new verticals. That is, more than just retail. It has expanded into new categories including health, electronics and travel.
Sezzle is also working on other areas of growth. It has a long-term instalment offering through its bank partnerships with Ally Financial. The BNPL business has in-store capabilities with the Sezzle virtual card. It also has credit building through Sezzle Up offering.
Is the Sezzle share price a buy?
The broker Ord Minnett certainly thinks so. It has a buy rating on Sezzle shares, with a price target of $10. That suggests the broker believes Sezzle could rise by around 80% over the next 12 months. However, the broker is paying attention to the BNPL business' bad debt levels.
Ord Minnett is expecting Sezzle to continue to spend and invest for growth, whilst reporting statutory losses over FY21 and FY22.
However, the Sezzle share price continues to fall – it's down 3% today.
