What Happened?
Shares of buy-now-pay-later service Sezzle (NASDAQCM:SEZL) fell 8% in the morning session after investors looked past a strong third-quarter earnings report, focusing instead on rising credit loss provisions, a key executive change, and emerging competition.
The company reported impressive results for its third quarter, including a 67% year-over-year revenue increase and its first-ever $1 billion quarter in Gross Merchandise Volume (GMV). Despite these strong headline numbers, the report also revealed that the provision for credit losses increased to 3.1% of GMV, up from 2.3% in the same period a year ago, raising concerns about loan quality. Adding to the uncertainty, the company announced that Chief Financial Officer Karen Hartje agreed to a twelve-month transition out of her role. Concerns were also heightened by news of increased competition, as US Bank partnered with Mastercard to launch a new credit card with features that directly rival buy-now-pay-later models.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sezzle? Access our full analysis report here.
What Is The Market Telling Us
Sezzle’s shares are extremely volatile and have had 80 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 2.5% on the news that a cooler-than-expected inflation report boosted investor confidence and fueled expectations for a Federal Reserve interest rate cut. The positive inflation data, showing the softest increase in the core Consumer Price Index (CPI) since May, has led investors to believe the Federal Reserve will soon lower borrowing costs. Markets widely anticipating a 25 basis point rate cut at the next Fed meeting. This optimism was further supported by strong economic growth indicators, with both the services and manufacturing sectors showing accelerated activity according to the S&P Global Flash Purchasing Managers' Index (PMI) data. The combination of easing price pressures and a thriving economy overshadowed concerns about an ongoing government shutdown, sending major indices like the S&P 500 to new record highs.
Sezzle is up 36.6% since the beginning of the year, but at $62.11 per share, it is still trading 65.9% below its 52-week high of $182.16 from July 2025. Investors who bought $1,000 worth of Sezzle’s shares at the IPO in August 2023 would now be looking at an investment worth $4,596.
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