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andyh2o

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11/11/23

18:32

Post #: 70848682
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Originally posted by Prestonian: ↑

Sezzle has managed to forge a bnpl model that is profitable and keeps customers and merchants happy. The platform is crying out for more customers and more UMS which should equal more profit and positive cash flow for the company. Where could Sezzle tap into a significant amount of new customers and UMS in one go? Especially where a degree of customer history might be available (so a lower risk of delinquencies)

Sezzle currently has a line of credit with Bastion for up to $100m at SOFR+11.5% so is ultimately limited in their UMS by that - and worth noting they can draw only 75% of the available receivables balance. At 30 Sept, the receivables were $111m and they'd drawn down $75m, so still some play there to permit a degree of growth but I'd argue at some point the arrangement will need to be upgraded for any significant growth. They previously had a $250m facility in 2021 before the massive downturn.

Banks want to increase engagement with their customers, maybe tap new market segments as well and ultimately increase their client base. Consumers are realising more and more that bnpl is an option, and wanting it.

So you can see there are a few ways in which a bank and bnpl company might enter into a mutually beneficial arrangement both in terms of service, customers, or the financing side too. All just imo but I'd suspect a Neobank would be a good match for Sezzle given they are also to a certain extent disruptors, more innovative and possibly with a younger client base, like Sezzle.

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great point!!

and for a bank in the current markets with rates rising, would want to see long term sustainability before extending a couple hundred mill in credit.
the next like if credit will likely be a big step up and allow them to really kick it up a gear and be more aggressive.

Price will rise fast in next few weeks as word and interest speeds, even with the current credit and model.
A bank partnership and new larger credit line will rerate several notches up!!

SZL Price at posting: $16.03 Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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