Sezzle (NasdaqCM:SEZL) is back in focus after announcing new merchant partnerships with Gymshark, Debenhams Group brands, and Follett Higher Education Group, widening where shoppers can use its installment payment tools.
Despite the new merchant deals, Sezzle’s share price has cooled in recent weeks, with a 30-day share price return down 7.69% and a 90-day share price return down 10.77%, even after an 81.75% year-to-date share price gain and a very large 3-year total shareholder return that signals how strong earlier momentum has been.
Spot opportunities across the buy now, pay later and fintech space by scanning our hand-picked 18 high quality undiscovered gems that could be building similar merchant momentum to Sezzle.Sezzle now combines a fast growing merchant footprint with a share price that has cooled in recent months. Does that recent pullback leave the stock attractively valued, or is it already baking in the good news?
Most Popular Narrative: 27.7% Undervalued
Based on the most followed narrative, Sezzle’s fair value of $163.67 sits well above the recent $118.41 close, which puts that recent pullback in a different light.
Ongoing investment in efficient, data-driven customer acquisition (marketing spend increase to $8.8 million with a targeted six-month payback and rapid ramp in high-LTV "mod" users) positions Sezzle to capitalize on the global shift toward digital payments, supporting expanding total addressable market (revenue growth) and potential for operating leverage (margin improvement) as investments mature.
Want to see what sits behind that growth story for Sezzle? The narrative leans on brisk revenue expansion, firm margins, and a richer earnings profile a few years out.
Result: Fair Value of $163.67 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
Still, the Sezzle story depends on heavy marketing spend delivering quick paybacks and credit losses staying contained. Both factors could pressure that undervaluation case.
Find out about the key risks to this Sezzle narrative.
Another View on Sezzle’s Valuation
On the simple P/E yardstick, Sezzle looks less clear cut. The stock trades on 24.7x earnings, which is richer than the US Diversified Financial industry at 17.3x, yet below a peer average of 41.5x and exactly in line with its 24.7x fair ratio. Is that a margin of safety or a sign expectations are already full?
Investors who want to pressure test those earnings assumptions against detailed profitability checks can run through the See what the numbers say about this price — find out in our valuation breakdown..
Next Steps
If the Sezzle story so far feels mixed, you may want to act quickly by checking the full picture yourself, including the 3 key rewards and 2 important warning signs.
Looking for more Sezzle sized investment ideas?
If Sezzle has sharpened your interest, do not stop here. Use the screeners below to uncover fresh opportunities before they move out of reach.
- Target resilient balance sheets by scanning companies in the list of solid balance sheet and fundamentals (23 results) that pair defensive finances with room for future execution.
- Hunt for mispriced quality by reviewing the 33 high quality undervalued stocks that filters for stronger fundamentals at valuations that may not fully reflect them yet.
- Prioritize smoother rides by focusing on the 11 resilient stocks with low risk scores that highlights businesses with lower risk scores for more measured portfolio construction.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com