The Sezzle Inc (ASX: SZL) share price has fallen 45.28% in the last 2 weeks. It closed today at $5.86 after trading at $10.27 only 2 weeks ago. This comes as the buy now, pay later (BNPL) sector sees investor enthusiasm moderating.
Why is the Sezzle share price falling
The Sezzle share price has fallen in line with the rest of the BNPL sector which boomed to new highs before dropping recently as investors exited the ‘overvalued’ sector.
While the company’s share price has now fallen significantly from its high of $11.83 last month, it is still up 238.55% since the beginning of the year when investors crowded to buy into BNPL companies. This trend appears to be turning around as investors start to see that the sector could be overinflated relative to future earnings of companies that offer BNPL services.
Investors are also concerned about competition, with payments giant PayPal recently announcing it was entering the sector. It may be hard for Sezzle and other buy now pay later providers to compete with PayPal’s existing size and customer reach and this may concern investors.
In August, Sezzle released record results for the half year to 30 June 2020. Underlying merchant sales rose 338% year on year to $445.20 and total income rose 384% year on year to $30.1 million. Merchant fees increased 390% year on year in the half year to 30 June 2020. Sezzle had 1.5 million active consumers on its platform at 30 June 2020 and 16,112 active merchants.
In August, Sezzle announced that it had raised $7.2 million through a securities purchase plan at a price of $5.30 per share. This followed an institutional placement in July through which Sezzle raised $79.1 million at $5.30 per share.
In July, Sezzle announced a partnership with Plaid to allow US customers to link their bank accounts to the Sezzle platform.
About the Sezzle share price
The Sezzle share price is up 1505.71% since its 52-week low of 35 cents and up 238.55% since the beginning of the year. The Sezzle share price is up 178.85% since this time last year.
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Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. 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.
The post The Sezzle (ASX:SZL) share price has now fallen 45% in 2 weeks as air continues to go out of the BNPL sector appeared first on Motley Fool Australia.
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