Sezzle’s BNPL Growth Is Working, But the Stock Comes With a Catch

Key Points

• Sezzle reported record second-quarter revenue and profit that beat Wall Street Sezzle’s subscription strategy, merchant growth and new products are helping turn its buy-now-pay-later platform into a more diversified fintech business.
• The stock’s sharp swings show that investors are still debating how much of Sezzle’s growth is already reflected in the valuation.
• Analysts still see upside, but credit losses, regulation, competition and volatility make Sezzle better suited for investors comfortable with risk.

Sezzle (NASDAQ: SEZL) has been taking shareholders on a memorable ride this year, both good and bad. The question is where it goes from here.

The fintech company recently turned in an impressive quarter, topping Wall Street's estimates on nearly every measure and lifting its outlook for a third consecutive time. By most measures, the results were strong.

Stockholders, however, didn’t agree. Shares plunged the next day. It's a classic case of too much good news setting high expectations, and investors looking for reasons to sell. Some analysts think it’s time to buy.

Sezzle’s Niche Is Turning Payments Into Recurring Revenue

Founded in 2016, Sezzle runs a buy-now-pay-later installment platform that lets shoppers split purchases into interest-free payments. The company went public on the Australian Securities Exchange in 2019, then completed a direct listing on Nasdaq four years later at $13 per share, which spiked that day to $81.

Among its differentiators is that Sezzle has carved out a niche with smaller merchants and subscription models, Sezzle Anywhere and Sezzle Premium, for consumers, which turns a payments app into a recurring-revenue business. When the company announced second-quarter earnings on Aug. 6, its active subscribers had jumped 76.4% year over year to about 854,000.

Revenue Growth Is Not Coming at the Expense of Profit

That subscription push is showing up in the numbers. Revenue for the three months came in at a record $149.7 million, 51.7% above year-ago performance and comfortably ahead of the roughly $135.1 million analysts expected. Net income rose 47.7% to $40.8 million, while adjusted net income totaled $39.3 million, an increase of 58.4%. Adjusted earnings per share of $1.13 were up 61.4% and beat estimates of $1.03.

Gross merchandise volume (GMV), or the total dollar value of purchases processed on the platform, rose to $1.3 billion, up 37.9% from a year earlier. Active consumers reached 3.16 million, with the average shopper transacting 7.2 times per quarter.

Adjusted EBITDA margin stayed basically flat at 38.8%, meaning that its growth is not coming at the expense of profitability.

Guidance Moves Higher, But New Products Remain the Wild Card

As a result, management raised the outlook for a third straight time, guiding to 35% full-year revenue growth, $185 million in adjusted net income, and $5.25 in adjusted earnings per share.

Two new products, SezzleCash and a peer-to-peer payment tool called Sezzle Send, are still in early rollout and were excluded from the guidance, giving the company room to beat if either gains traction.

Sezzle also said it lined up a $300 million credit facility to lower its funding costs, bought back $28 million of its stock during the first half of the year, and in September announced it signed new merchant partnerships with Gymshark, the Debenhams Group of British retail brands, and Follett Higher Education's network of more than 1,000 college bookstores.

Why Sezzle Fell After a Strong Quarter

None of that news, however, stopped the stock from falling roughly 34% the day after the report in what looked like a valuation reset rather than a business problem.

Shares had already more than doubled in the prior three months heading into earnings. And despite the runup, or perhaps because of it, Sezzle’s guidance implying slower growth in the second half of the year gave investors a reason to take profits.

The Risks Behind the BNPL Growth Story

Yet there are other reasons for caution. Sezzle's provision for credit losses, the money it sets aside for shoppers who don't pay, is expected to run between 2.5% and 3% of GMV for the full year.

Sezzle has also filed an antitrust lawsuit against Shopify NYSE: SHOP, which is still pending. In addition, buy-now-pay-later products broadly face an uncertain regulatory path after the Consumer Financial Protection Bureau moved to bring installment loans under credit-card-style rules.

This comes after a short-seller report from Hindenburg Research in late 2024 questioned Sezzle's underwriting, even though the stock has since climbed well above where it traded at that time.

The company also competes against Affirm (NASDAQ: AFRM), PayPal’s (NASDAQ: PYPL) Pay-in-4 product, Block's NYSE: XYZ Afterpay, and Klarna (NYSE: KLAR), all fighting for the same checkout real estate.

Sezzle’s Upside Case Comes With Volatility

Wall Street, for its part, still likes the stock, though with mixed assessments. Nine analysts cover the stock, with a consensus rating of Moderate Buy and an average 12-month price target of $146.50, implying about 23% upside. The highest 12-month price target is $172, while the lowest is $76. That spread is enough to indicate the high degree of variation among analysts’ expectations.

That tentative view is also evident in the market's skittishness. Shares of this Minneapolis-based company have swung from roughly $65 at the start of 2026 to an all-time high approaching $196 in July, before plunging after the earnings report. It is currently still up nearly 90% year-to-date.

Sezzle, which does not pay a dividend, appears to be a growth stock and is trading accordingly. With fast-growing revenue, improving profitability, a price/earnings ratio of almost 26, and management that keeps beating its own targets, it’s a company wrapped in a valuation with a stock chart that can swing hard in both directions.

For investors comfortable with a potentially exciting but bumpy ride, raised guidance, new revenue streams and a growing merchant base argue for staying engaged. More conservative investors might want to watch from afar.

Either way, Sezzle has earned its place on a watchlist, and any decision to buy should come with a plan for how much volatility can be tolerated.