Sezzle Authorizes New $15 Million Stock Repurchase Program, page-106

Greeting, there are many variables when trying to put a valuation of a company. For me, I often compare with its peers as a yardstick to make investment decisions.
Let’s use Sezzle’s big and main competitor Affirm as a comparison as they both have similar growth trajectory and guidance from their latest earnings call. I will use simple financial metrics as Affirm is still unprofitable.
The market is valuing the loss making Affirm at $13.69B as of Friday closed share price. The annual revenue to June 30 was $2.32B giving the market cap to revenue ratio of x5.9.
Sezzle’s current market cap is $841.71m and annual revenue to June 30 was $192.7m. If we were to use Affirm’s x5.9 market cap to revenue ratio, this would give Sezzle’s market cap of almost $1.137 billion or $203 per share with PE ratio of 28.8.

Now let’s use Sezzle’s upgraded revenue guidance growth of 35-40% annually or average of 37.5% for the next 3 years compound. This would give annual revenue of around $501 million after 3 years, if we use the simple metric of x5.9 again, the market cap of Sezzle would be at $2.956B or $528 per share. Of course we can’t predict the future that far ahead as macroeconomic conditions change constantly but I find management often give conservative estimates and almost every earnings call exceeds expectations.

One of the key drivers for Sezzle’s increase profitability is the growth of Sezzle Premium and Everywhere subscription, it’s easy money and with latest bank partnership with Webbank, it will diversify their financial products even more and gain more exposure. But, ultimately marketing is key to bigger growth as with every successful business and the partnership with the Timberwolves will give that marketing exposure to a wider audience.