Forget Affirm, Block, and Klarna; this BNPL stock is killing it

Buy Now Pay Later (BNPL) stocks are doing well this year as it becomes one of the common ways for people to do their shopping. Affirm, one of the most popular BNPL companies, has risen by almost 50% this year, beating the S&P 500 index. 

Similarly, Block, formerly known as Square, and the parent company of AfterPay, has risen by 25.6% this year. In Australia, Zip shares have jumped by over 400% this year, making it one of the best-performing companies in the industry.

In Sweden, Klarna, one of the top companies in Europe, has announced that it will launch its Initial Public Offering (IPO) soon. Analysts expect that it will receive a valuation of between $20 billion and $15 billion, much lower than the $47 billion it received a few years ago. 

This report focuses on Sezzle (SEZL), the best-performing BNPL stock in the United States this year.

Why Sezzle stock has jumped

Sezzle stock price has jumped by almost 2,200% this year, making it one of the top performers in the Russell 2000 index. This jump has helped to bring its market cap to over $2.2 billion. 

Sezzle is similar to other BNPL companies in that it lets users buy products and pay in equal installments. Its primary product is known as Pay-in-Four, and it lets customers pay a fourth of their purchases up front and then another fourth every two weeks. 

Unlike credit card companies, Sezzle does not charge customers for these products as long as they pay on time and link their banking details on the platform. As a result, it makes money through late fees and commissions it receives from retailers. 

The company has also launched another product known as Pay-in-Full, which allows them to pay upfront using the platform. The benefit is that these customers can build their reputation and ensure that they are not denied credit in future. 

Sezzle also offers a Pay-in-Two solution that is open to customers who don’t qualify for the pay-in-four offering. Its other solutions are the Sezzle Virtual Card, Sezzle Anywhere, Sezzle Premium, and Sezzle Up.

SEZL growth is continuing

These flexible offerings have helped the company supercharge its growth in the past few years. According to SeekingAlpha, its annual revenue has jumped from over $13.3 million in 2019 to over $159 million last year. Its revenue has soared to $221 million in the trailing twelve months.

Analysts are optimistic that Sezzle’s revenue will continue growing in the next few years. Precisely, they believe that its annual revenue will rise to $247 million this year followed by $326 million next year. This growth prospects explains why its stock has jumped sharply.

Most importantly, Sezzle has managed to turn a profit, with its trailing twelve-month profit jumping to over $56.1 million. Also, it has partnered with WebBank, a Utah bank that will be the originator of its loans.

The most recent financial results showed that its business was continuing to see strong growth. Its active subscribers for its premium service jumped to 529,000 from 210,000 the same quarter in 2023. 

Sezzle’s active customers jumped to 2.6 million, while the number of merchants on its platform jumped to 274,000. 

Its revenue growth continued in the last quarter, jumping by 71.3% and hitting $70 million, while net income jumped to over $15 million.

Sezzle stock price analysis

The daily chart shows that the SEZL share price has been in a strong bull run in the past few months. It has remained above the 50-day and 25-day Exponential Moving Averages (EMA).

Sezzle has also moved above the Ichimoku cloud indicator, meaning that bulls are in control. The Relative Strength Index (RSI) has been in a strong uptrend. Therefore, the stock will likely continue rising as bulls target the key resistance level at $500.