Sezzle Doubles Buyback Authorization to $100M Amid High Valuation and Regulatory Risks

What happened

Sezzle's board has authorized an additional $100 million for share repurchases, doubling the previous amount and signaling management's confidence in the company's cash generation. This move follows Sezzle's impressive turnaround to profitability, with revenue up 70% in 2024 and strong performance in 2025, including nine-month revenue already surpassing full-year 2024 levels. However, the DeepValue report indicates the stock is significantly overvalued, trading at ~23.5x P/E and over 3.5x above a conservative DCF estimate of $15 per share, embedding optimistic growth assumptions. Key risks highlighted include regulatory pressures on BNPL fees, credit exposure to young subprime consumers, funding dependence on warehouse lines, and governance concerns. Despite the buyback news, these structural issues remain unaddressed, suggesting the stock's recent gains may not be sustainable in light of potential headwinds.

Implication

Share repurchases could provide short-term support to the stock price by reducing share count and boosting earnings per share. However, given Sezzle's high valuation multiples, the buyback may not create sustainable value unless aggressive growth and margin assumptions are met. Investors should remain wary of regulatory clampdowns on consumer and late fees, which comprise a growing portion of revenue and are under scrutiny from authorities like the CFPB. The company's reliance on subprime consumers and non-exclusive funding sources adds credit and liquidity risks that could escalate in a downturn. Overall, while the buyback reflects management optimism, it does not alter the fundamental investment case that downside risks outweigh potential rewards at current price levels.

Thesis delta

The share repurchase authorization does not shift the investment thesis, as Sezzle remains overvalued with unaddressed structural risks highlighted in the DeepValue report. Management's confidence in cash flow is evident, but this move does not alleviate concerns about regulatory, credit, or competitive pressures that could erode earnings. Therefore, the 'POTENTIAL SELL' recommendation persists, as the buyback fails to change the core downside scenario.