Sezzle Beat on Revenue and Raised Guidance. Its Stock Lost a Third of Its Value in a Day.

Buy now, pay later (BNPL) company Sezzle (NASDAQ: SEZL) closed at $178.53 on Thursday. By Friday's close, the stock was at $118.02 -- a one-day decline of 33.89% that wiped out about $2 billion of market value. The whole company was worth about $6 billion at Thursday's close and just under $4 billion a day later.

The report that triggered it, released Thursday evening, didn't look like that kind of news. Second-quarter revenue rose 51.7% year over year to $149.7 million -- a record, and ahead of analysts' estimates. Net income came in at $40.8 million, up 47.7%, and earnings per diluted share reached $1.17, from $0.78 a year earlier.

Active subscribers surged 76.4% to 854,000, the largest year-over-year gain in the company's history. And management raised its full-year guidance for the third time this year.

So why did a quarter that strong cost the stock a third of its value? Much of it comes down to the second half the new guidance implies, and to where the stock was trading when the report landed.

Image source: Getty Images.

Another record quarter

Measured against a year ago, the second quarter was Sezzle's best. Gross merchandise volume, or GMV (the total dollar value of purchases financed on the platform), grew 37.9% year over year to $1.3 billion. Non-GAAP (adjusted) net income rose 58.4% to $39.3 million, and adjusted EBITDA reached $58 million, a 38.8% margin.

And the engagement behind those numbers deepened. Average purchase frequency hit a company high of 7.2 times per quarter, up from 6.1 a year ago.

The updated outlook moved higher, too. Management now expects revenue to grow 35% this year, the top of its prior 30% to 35% range, and raised its adjusted earnings target to $5.25 per diluted share. In February, that guidance was 25% to 30% growth and $4.70 per share. The company keeps outrunning its own forecasts.

Why did the stock fall so hard?

Revenue, though, grew about 14 percentage points faster than the dollar volume behind it. That gap came from yield: Revenue as a percentage of GMV reached 11.7%, after 10.6% in the year-ago quarter. Sezzle earned more on every dollar its shoppers spent, and that yield expansion drove a meaningful share of the quarter's 51.7% growth rate.

The guidance carries the bigger signal. First-half revenue totaled $285.2 million, up 40% year over year. Growing 35% for the full year, on last year's $450.3 million, implies about $608 million of revenue in 2026, which leaves roughly $323 million for the second half.

That's about 31% growth, a sharp slowdown from the 51.7% just reported.

Some of that math reflects an easy comparison, since the year-ago second quarter was the softest stretch of Sezzle's 2025. This quarter's growth rate was likely always going to flatter the trend. But the direction is the same either way -- a second half growing near 31%, closer to volume growth than to the headline rate Sezzle just reported.

That mattered because of where the stock stood. Coming into the report, shares had climbed about 260% from their 52-week low of $49.50 and sat within about 10% of their 52-week high.

At Thursday's close, shares cost about 34 times the newly raised full-year adjusted earnings target. Investors were paying for the 51.7%, not the 31%.

A much cheaper stock than on Thursday

One day later, the price asks far less. At $118.02, Sezzle trades at about 22 times the full-year adjusted earnings figure management just guided to. That's for a growth stock still expected to grow revenue 35% this year, with a net income margin near 27% and a subscriber base up 76% from a year ago.

Of course, BNPL is a credit business, and a credit business's growth can look terrific right up until losses catch up with it. Sezzle's yield gains won't repeat forever, either. And the second half will test whether marketing spending, which more than doubled in the first half, keeps producing subscribers at this pace.

Still, I'd call Friday's move a repricing more than a verdict on the business. The quarter was excellent, but investors had been paying for the headline rate, and the new outlook shows that rate cooling toward volume growth in the second half. At about 22 times guided earnings, the stock is arguably priced much closer to the forecast the company gave.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Sezzle. The Motley Fool has a disclosure policy.