Ann: Q3 FY22 Results - Zip Accelerates Path to Profitability, page-129

At the end of the day all these BNPL positioned themselves as growth stocks and earned themselves ridiculous valuations by exciting investors by TAM figures.

But the total addressable market was pure fantasy as the adoption by brain dead " poor as a church mouse " millennials was never going to be repeated by other more financially savy consumers

Even the key user base was not using the system frequently enough to generate sufficient revenue to cover the cost of customer acquisition.

So they are not " growth stocks" any more simply a Financial Service Provider making micro loans to financially challenged customers and on thin margins.

So what does the future hold

Financial service providers usually trade at PE of 15 at the top of the market and 6 at the bottom of the market

After issue if the Sezzle shares and the never ending flow of " performance shares" at current prices the market cap will be over $1 billion

On a PE of 6 it needs to generate $170 million of after tax profit and on a PE of $15 an after tax profit of $70 million.

How is it going to do that with current OPEX of $300 million .

Lets say they reduce employment costs by $30 million and slash marketing costs by $70 million.

They still have OPEX of $200 million.

Unit economics after deducting bad debt, bank and data costs and interest expense leaves zero margin.

So let's say the reduce bad debt by 1 percent ( highly unlikely ) and nett transaction margin of 1 percent.

To break even they need $20 billion of annual GMV

At the lower PE they need GMV of $37 billion

At the higher PE only $27 billion of GMV

And that is only to justify current share price

They are not even at $10 billion and growth is actually going backwards.

They will NEVER EVER make a profit.