Sezzle Inc (ASX: SZL) could be one of the sleeper ASX growth shares to watch in 2020. It is a US based, buy-now-pay-later (BNPL) fintech that has seen its share price rise by 489% since 23 March. Sezzle has a number of benefits over its BNPL stablemate Afterpay Ltd (ASX: APT).
About Sezzle
Sezzle’s location as a United States-based fintech immediately exposes it to the largest potential BNPL market in the world. With a US$5.4 trillion dollar retail market, the US makes Australia’s trading environment look like small beer. In addition, as a US-based operator, Sezzle doesn’t have to deal with the continual regulatory threats that Afterpay faces.
Afterpay is also up against stiff opposition from Klarna, a Commonwealth Bank of Australia (ASX: CBA) backed competitor. In the US and Canada there is no single entity with the size or relative scale the Commonwealth Bank has in Australia.
Sezzle boasts 1.3 million users and 14.9 thousand merchants. It has also secured a credit facility worth US$100 million. In addition, the company is already looking northward to the US$460 billion Canadian retail market.
Afterpay holds prime position on the ASX with a market cap of over $12 billion. Yet both of Sezzle’s markets are larger than the Australian market.
BNPL fintech demographics
Like fellow BNPL fintechs Afterpay and Zip Co Ltd (ASX: Z1P), Sezzle also targets the Gen Z and Millennial consumer demographics. These groups are tech savvy and make up the largest slice of all age demographics in the US. Sezzle estimates Gen Z will hold 25% of total spending power in 2020.
The company allows this demographic to control their spending, while giving them access to goods and services they would be unable to purchase with limited disposable income.
Foolish takeaway
The fintech sector has seen some of the fastest growing ASX shares this year. I believe a number of our best performing shares over the next decade will also be in this sector. Sezzle has a number of natural advantages over its much larger rival, Afterpay, and therefore I think this company deserves a place on your watchlist.
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More reading
- How bankable are the big four ASX bank shares in 2020?
- Why Nearmap’s share price surged by 50% in May
- Openpay share price surges 29% higher after BNPL provider reports record month
- Real wealth from 3 roaring mid caps in May
- Afterpay share price rockets 50% in May, is it in the buy zone?
Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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