The market may be dropping lower today but that hasn’t stopped the Sezzle Inc (ASX: SZL) share price from charging higher.
At the time of writing, the buy now pay later provider’s shares are up 6% to $11.14.
This latest gain means the Sezzle share price is now up 79% since the start of the year.
Why is the Sezzle share price charging higher?
Investors have been buying Sezzle shares after it announced the signing of a US$250 million receivables funding facility with Goldman Sachs Bank USA and Bastion Funding.
According to the release, these funds will be used to support the expansion of the company’s business in the United States and Canada.
Management notes that Sezzle’s new 28-month facility complements its strong balance sheet, replaces its US$100 million receivables facility, and extends its funding facility well into 2023. The latter compares with its previous facility’s maturity of May 2022.
Another positive is that the new facility also lowers its cost of funding, which will provide a positive effect on Sezzle’s net transaction margin over time.
During the first half of FY 2020, Sezzle reported a net transaction margin of 1.7% of underlying merchant sales. This facility could see it close the gap on rival Afterpay Ltd (ASX: APT), which enjoyed a net transaction margin of 2.3% in FY 2020.
Sezzle’s Chief Financial Officer, Karen Hartje, was pleased with the facility and to be working closely with Goldman Sachs and Bastion Funding.
She commented: “The committed facility from Goldman Sachs and Bastion will play a critical role in the growth and capital management strategies of Sezzle for 2021 and beyond.”
“We are happy to be working with them, as we are experiencing significant growth in the US and Canada. We have never been in a stronger liquidity position in which to achieve our growth plans while lower our funding costs,” Hartje added.
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Returns as of 6th October 2020
More reading
- Will LimePay IPO drive ASX BNPL shares even higher?
- The growth of this BNPL ASX share has been outpacing Afterpay (ASX:APT)
- 3 reasons to consider Sezzle (ASX:SZL) at this share price
- Here’s why the Sezzle (ASX:SZL) share price is dropping lower
- What’s in store for the ASX tech sector in 2021?
James Mickleboro 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 owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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