Sezzle Inc. (SEZL): A Bull Case Theory

Ricardo Pillai

Tue, May 20, 2025, 10:40 AM 2 min read

We came across a bullish thesis on Sezzle Inc. (SEZL) on Substack by Next’s Substack. In this article, we will summarize the bulls’ thesis on SEZL. Sezzle Inc. (SEZL)'s share was trading at $90.10 as of May 15^th. SEZL’s trailing P/E was 30.35 according to Yahoo Finance.

Sezzle Inc. (SEZL) has quietly evolved from a speculative buy-now-pay-later (BNPL) startup into a highly profitable, founder-led fintech compounder with strong alignment between management and shareholders. Operating primarily in the U.S. and Canada, the company offers interest-free installment plans for consumers while monetizing through merchant transaction fees. Sezzle’s mission-driven approach—centered on financial empowerment through tools like budgeting, rescheduling, and gamified education—sets it apart in a crowded space.

In Q1 2025, Sezzle reported a breakout quarter, with 123% revenue growth, 34% net margins, and a 300% EPS beat, leading to a 50% upward revision in full-year guidance. Founder and CEO Charlie Youakim, who owns 44% of the company, has maintained tight capital discipline, completing a $25M buyback and overseeing only minimal dilution since 2020. EPS has inflected from –$1.20 in FY22 to a projected $3.25 in FY25, with valuation remaining compelling at just 27x forward EPS and 14x EV/EBITDA—well below peers like Affirm and Klarna. With gross margins at 60%, net margins at 34%, and credit losses at just 12% of revenue, Sezzle resembles a SaaS business more than a high-risk lender.

Despite a $2.7B market cap, the company operates in a BNPL market projected to reach $290B GMV by 2030, while Sezzle’s current GMV sits at just $2.6B. Proprietary behavioral underwriting, rapid capital turns, and new products like Pay-in-5 and virtual cards offer strong optionality. With 50% insider ownership and institutional backing, Sezzle offers an asymmetric opportunity that could deliver 3–5× returns over 12 months, with a base case target of $188 and a bull case of $291.

Sezzle Inc. (SEZL) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held SEZL at the end of the fourth quarter which was 12 in the previous quarter. While we acknowledge the risk and potential of SEZL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SEZL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.