I think the prophet model news is good and imparts an IP value. The extra $10m in initiatives in theory might take SZL to a forecast annual profit before tax of $10m USD per annum based on recent performance. You might start to value SZL at 10 times (fc PBT) to get a usd $100m val for the business, or about 70c aud. And if that $10m is locked into the business you have a gradual reduction in financial risk which might generate an interest rate reduction, and an extra increment of value.
And then you have the extra value to a potential bigger acquirer who can possibly reduce the costs and save on interest, add synergies, and provide space. Say American Express as merely an example. They might have a strategic benefit from being in BNPL if they can apply funds to grow certain parts of the business. They may even be able to apply Prophet to their own Amex branded pay in 4. I could see USD $200m value to the right suitor at least, maybe more with their $165m in losses that should be available to offset taxable income, and could possibly be discounted into a gain on bargain purchase calc. Somebody like American express could broaden the range of merchants, be efficient with providing cards etc, provide lower cost admin services. Kabbage (owned by Amex) uses Paypal pay in four.
Sezzle has that Bastion credit facility in place until Oct 2024 - so seems unlikely that Sezzle is about to become a bargain due to financing needs.
I'm not sure what the regulations are in the US - but this use of the Prophet (credit scoring?) model might reduce regulatory risk, and the remove the costs of having to pay FICO or some other credit scoring co. There appears to be some requirements being talked about, many of which are disclosure related.
SZL Price at posting:
56.0¢ Sentiment: Buy Disclosure: Held
