Why Is Sezzle Stock Slumping Premarket Despite Q2 Earnings Beat?
Synopsis
The buy-now-pay-later firm reported adjusted earnings of $0.69 per share for the three months ended June 30, while Wall Street expected it to post $0.58 per share.
Sezzle (SEZL) stock fell 18.5% in premarket trading on Friday despite topping Wall Street’s estimates for second-quarter earnings.
The buy-now-pay-later firm reported adjusted earnings of $0.69 per share for the three months ended June 30, while Wall Street expected it to post $0.58 per share, according to Fiscal.ai data. Its revenue rose 76% to $98.7 million, exceeding analysts’ expectations of $94.9 million.
However, the revenue growth was slower than the triple-digit percentage spike in the previous quarter. Sezzle also maintained its 2025 adjusted net income forecast of $3.25 per share, while Wall Street expects it to post $3.26 per share.
The stock has a high price-to-earnings (PE) ratio of 41.6 for the next 12 months, compared with 37 for rival Affirm and 12.9 for bigger fintech firm PayPal. The PE ratio is a widely used industry metric aimed at gauging valuation.
Amid intense competition, the company reported that it increased its marketing spend to $8.8 million during the second quarter, compared with $1 million in the same quarter last year. “We don't take this lightly as we value every dollar, but we also believe that this is the right time for this future investment,” CEO Charlie Youakim said.
Retail sentiment on Stocktwits about Sezzle was still in the ‘extremely bullish’ territory at the time of writing.
“Huge buying opportunity. Lucky to those who have spare cash to buy,” one user said.
The company announced that its gross merchandise volume (GMV) reached a new high of $927 million, representing a 74.2% increase compared to the same period last year, driven by higher engagement from both Subscriber and On-Demand users.
“The product features and marketing initiatives we’ve rolled out are driving stronger engagement and broader adoption,” Youakim said.
Sezzle stock has more than tripled this year.
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