Stock Drop of Sezzle Today Explained
Sezzle, the buy now, pay later company, reported robust earnings for the second quarter of 2025, with significant growth in revenue, gross merchandise volume, and adjusted earnings per share. However, the stock price is down as the results did not meet some investors' expectations, and the company faces legal and regulatory challenges.
Strong Growth and Improved Profitability
Sezzle's Q2 2025 earnings report showed a 74.2% year-over-year increase in Gross Merchandise Volume (GMV) to $927 million and a 76.4% growth in revenue to $98.7 million[1][2][3]. Operating income more than doubled, with a 116.1% year-over-year increase to $36.1 million and an expanded operating margin of 36.6%, demonstrating improved profitability and operational efficiency[1][2][3]. Adjusted earnings per share nearly doubled to $0.69, beating estimates and underlying strong earnings quality[3].
Aggressive Growth Strategies and Financial Strength
Sezzle's management has raised its full-year 2025 revenue growth forecast to 60-65% from a prior 25-30% estimate and projects adjusted EBITDA of $170-175 million and adjusted net income reaching $120 million, or $3.25 per diluted share[4][5]. This growth is driven by aggressive marketing (780% increase year-over-year) boosting user base and purchases, along with product diversification initiatives such as Sezzle Balance[1][2][5]. The company also maintains strong financial health with $120 million in cash reserves and an ongoing share repurchase program, underscoring management's confidence in the business[1][2].
Regulatory and Legal Challenges
However, Sezzle faces legal and regulatory challenges, including a 3–5 year antitrust lawsuit involving Shopify and broader BNPL sector regulations. The company is proactively managing these risks through credit reporting enhancements and compliance measures[1][4]. Despite these headwinds, Sezzle is well-positioned to capitalise on the rapidly expanding BNPL market, forecasted to reach $911.8 billion by 2030[1].
Stock Price Dip and Forward P/E
Despite these positive results, shares of Sezzle are down 33.7% as of 11:42 a.m. ET. The forward P/E of Sezzle is considered a great price for the fast-growing, disruptive BNPL player. The stock price of Sezzle now trades at a forward P/E of under 30[6].
In conclusion, Sezzle's strong Q2 earnings, aggressive yet efficient growth strategies, and heightened guidance reflect a positive future outlook, with the company delivering on expanding its user base, revenues, and profitability while navigating regulatory risks carefully[1][2][4][5]. However, the stock price dip may indicate that some investors have higher expectations for the company's growth rate, given its recent performance.
References
- Sezzle Reports Q2 2025 Earnings, Raises Full-Year Revenue Guidance (PR Newswire)
- Sezzle Q2 2025 Earnings: Revenue, Earnings, and Analyst Reactions (The Motley Fool)
- Sezzle Q2 2025 Earnings Release (SEC Filing)
- Sezzle Q2 2025 Earnings Call Transcript (Seeking Alpha)
- Sezzle Q2 2025 Earnings Presentation (Sezzle Investor Relations)
- Sezzle Stock Price, Stock Quote, Stock Performance (Yahoo Finance)
Investors are prioritizing technology's role in finance, as seen in Sezzle's robust earnings report for Q2 2025, where strong growth in revenue, gross merchandise volume, and adjusted earnings per share suggest profitable investments. Despite the stock price drop, Sezzle's financial outlook remains promising due to aggressive growth strategies and financial strength. However, the company must address legal and regulatory challenges to maintain its competitive edge in the rapidly expanding buy now, pay later market.
