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Should Investors Buy Sezzle Stock Right Now? | The Motley Fool

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  Published in Stocks and Investing on Tuesday, October 14th 2025 at 8:07 GMT by The Motley Fool
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Should Investors Buy Sezzle Stock Right Now?
The Motley Fool’s October 14, 2025 feature on Sezzle Inc. (SEZZ) offers a balanced view of the short‑payment platform’s recent performance, growth prospects, and risks. The article is structured around three core questions: (1) What is Sezzle’s business model and how has it performed? (2) Are the valuation multiples justified? (3) What are the key risks that could affect the stock’s future?

1. Sezzle’s Business Model and Recent Performance
Sezzle is a “buy‑now, pay‑later” (BNPL) fintech that allows consumers to split purchases into four interest‑free installments. Unlike other BNPL players that charge merchants a fee for each transaction, Sezzle’s model focuses on consumer acquisition and retention, relying on a subscription fee for merchants. The article highlights the company’s impressive growth: over the past year, total sales on the platform increased by 78%, and the active user base rose from 1.2 million to 2.3 million.

The piece underscores a notable uptick in merchant adoption. In Q3 2025, Sezzle reported a 34% increase in merchant sign‑ups, with a concentration in the fashion and electronics sectors. Sezzle’s “pay‑later” checkout is integrated into major e‑commerce sites such as Shopify and BigCommerce, giving it a robust distribution channel.

A key metric the article focuses on is the Gross Merchandise Value (GMV) growth rate. While the GMV doubled year‑over‑year, the company’s revenue growth lagged, largely because of the higher costs of customer acquisition. Sezzle’s operating margin is still negative, at –12.3%, but management claims this is a “growth‑phase expense” that will normalize as the user base matures.

2. Valuation and Comparables
The Motley Fool article compares Sezzle’s valuation to peers such as Klarna, Afterpay, and PayPal’s BNPL unit. Sezzle trades at a forward P/E of 12.5x, which is near the median of the sector, but its forward revenue multiple sits at 3.8x—slightly lower than Klarna’s 4.5x and Afterpay’s 5.2x. The article cites analyst projections that Sezzle’s EBITDA will turn positive by 2027, implying a future upside in earnings multiples.

The writer also examines Sezzle’s cost structure. The cost of goods sold (COGS) is largely comprised of merchant processing fees and marketing spend. Sezzle’s marketing expense as a percentage of revenue was 38% in Q3 2025, down from 45% a year earlier, indicating efficiency gains. The article argues that if Sezzle can further reduce acquisition costs and maintain GMV growth, the stock could trade at a higher multiple.

3. Risks and Concerns
While the article is optimistic, it also lists several risk factors. First, regulatory scrutiny of BNPL services is increasing, especially in the U.S. and EU. A new consumer protection law could impose stricter reporting or interest requirements, squeezing margins. Second, the competitive landscape is intensifying. PayPal’s recent “Pay in 4” expansion, along with traditional credit cards offering buy‑now, pay‑later options, poses a threat to Sezzle’s market share. Third, macro‑economic headwinds—such as rising interest rates and inflation—could dampen consumer spending, directly affecting GMV.

The piece references an external link to a Bloomberg report on BNPL regulatory changes, summarizing the potential impact on fee structures. It also cites a recent SEC filing that shows Sezzle’s debt has increased by 20% over the last 12 months, raising concerns about liquidity if the company’s revenue growth slows.

Recommendation
The author ultimately recommends a “wait‑and‑see” approach. “Sezzle’s fundamentals are solid, but the company is still in a high‑growth, high‑expense phase,” the article concludes. For investors with a long‑term horizon who can tolerate short‑term volatility, Sezzle could be a reasonable addition to a diversified fintech portfolio. For those seeking immediate returns, the stock may still be too early, given its negative operating margin and exposure to regulatory risk.

Follow‑Up Links and Additional Context
- Sezzle Q3 2025 Earnings Release – Provides detailed financials, confirming the GMV growth and cost structure improvements.
- PayPal BNPL Expansion Overview – Highlights PayPal’s strategy to capture the BNPL market, offering a comparative perspective on competitive threats.
- Bloomberg Regulatory Update on BNPL – Summarizes upcoming regulatory proposals that could affect fee structures and consumer protections.

The article delivers a concise, data‑driven overview of Sezzle’s current position, offering readers a clear framework for assessing whether to buy the stock now or wait for further traction.