So the main driver for Z1P to re-rate will be Sezzle's US Listing. If Sezzle's US listing proves to be a big hit (which is looking likely), then Z1P will follow and re-rate accordingly. Sezzle has made it clear that they are listing in 2021. Sezzle has filed a registration with the SEC on Aug 23rd. Goldman Sachs will be doing the underwriting.
Sezzle currently trades at around 6x FY22 revenue On the NASDAQ, Affirm trades at 30x forward revenue and Afterpay was acquired at 40x revenues. So by US standards both Z1P and SZL are grossly undervalued. This is likely due to heavy shorting and the fact that ASX funds are very conservative and can't value growth stocks.
BNPL sentiment is growing
rapidly in the US. The highly publicized
Square + Afterpay deal really put the spotlight on BNPL in early August. It has made US investors aware of this paradigm shift and it's been now referred to as THE fastest growing fin-tech phenomenon in the world.
VIDEO Then the Affirm + Amazon deal came through in late August, along with fantastic earnings, that we're used to already, and Affirm has now appreciated 70% over a month, with very little action on the ASX. BNPL has just started getting more traction now, which means we could be at the beginning of the next bull-run after a 6-month consolidation. Sezzle also gets a mention in the below video at 2:18 along with Klarna and Afterpay.
VIDEO Now, let's see what happened with Paypal last week, Paypal needs to move quickly to consolidate. Obviously Paypal's own BNPL solution isn't working because BNPL is more than just a payment method, it's about the marketplace they create. Paypal acquired Paidy last week for $2.7B USD. Paidy is estimated at $65M revenue (a lot less than Z1P and SZL), but was acquired at a 41x revenue multiple. Afterpay was acquired at 42x for reference.
VIDEO So what does this mean? This means when SZL IPOs in the US, it will be the only BNPL on the US market apart from Affirm. When you list on a US index, not only do you get US investors, you get all the global ones too. And right now, there is an insane amount of spotlight on BNPL, which means it is very likely that SZL will trade higher, especially at its current 6x Revenue market cap. This could trigger a sharp re-rate across all existing BNPLs and would be the impetus that causes Z1P to list on the NASDAQ too and re-rate accordingly.
(20min delay)