Why Sezzle Stock Plunged Today

Key Points

• Sezzle delivered another round of strong growth on the top and bottom lines.

• Guidance calls for growth to decelerate in the second half of the year.

• The stock looks well priced based on its forward P/E.

• 10 stocks we like better than Sezzle ›

Shares of Sezzle (NASDAQ: SEZL) were taking a dive after better-than-expected results on the top and bottom lines were not enough to please investors.

As a result, the stock was down 33.7% on the news as of 11:42 a.m. ET.

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Sezzle cools off

Sezzle, a buy now, pay later (BNPL) company that's taken the market by storm over the last two years, continued to deliver impressive growth. Revenue grew 76.4% to $98.7 million, which beat analyst estimates at $94.9 million.

Sezzle's monthly on-demand and subscribers metric reached 748,000, up from 658,000 in the previous quarter, showing solid growth in its high-frequency user base. Gross merchandise volume was also strong, up 74.2% to $927 million.

Margins continued to expand as operating income jumped 116.1% to $36.1 million, and adjusted earnings per share was up 97% to $0.69.

CEO Charlie Youakim said, "The product features and marketing initiative we've rolled out are driving stronger engagement and broader adoption."

What's next for Sezzle

While its results were strong, given its blistering growth coming into the report, investors may have expected a wider beat.

Additionally, Sezzle's guidance calls for its growth to continue to decelerate as the company sees revenue growth of 60%-65% and adjusted earnings per share of $3.25, which was just slightly below the consensus at $3.26.

After soaring growth through the first half of the year, that reflects a significant moderation in the second half of the year as well.

Still, the stock now trades at a forward P/E of under 30, which looks like a great price for the fast-growing, disruptive BNPL player.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sezzle. The Motley Fool has a disclosure policy.