Sezzle's Bullish Article Confronts DeepValue's Sell Rating Amid Valuation and Risk Concerns

What happened

A Seeking Alpha article published on January 15, 2026, touts Sezzle's strong BNPL momentum, robust revenue growth, and attractive forward P/E of 17.4x based on a $4.35 EPS target for 2026. However, the latest DeepValue master report rates Sezzle as a 'POTENTIAL SELL' with high conviction, citing elevated multiples at 27x trailing EPS that embed unsustainable growth assumptions. Critical analysis reveals rising credit losses, heavy dependence on consumer fees, and an aggressive $100M buyback program without disclosed financial guardrails. Underlying financials show provision for credit losses at 27.5% of revenue in Q3 2025 and delinquency fees surging, indicating vulnerability to regulatory or economic downturns. Thus, while the article paints an optimistic picture, it glosses over the structural risks documented in filings and independent reports.

Implication

The bullish article may fuel short-term optimism, but DeepValue's analysis warns that Sezzle's high growth is already priced in, leaving minimal margin for error. Credit metrics, such as provision losses nearing 3% of GMV, pose a direct threat to margins if exceeded, while regulatory scrutiny on BNPL fees could compress earnings. Aggressive buybacks signal management confidence but risk capital misallocation if executed amid deteriorating fundamentals, especially with revolver usage rising. Over the next 6-18 months, any growth deceleration or credit shock could lead to multiple compression, pushing the stock toward the bear-case target of $55. Therefore, prudent investors should wait for a price reset below $60 or clear evidence of stable credit performance before considering entry, aligning with DeepValue's risk-aware stance.

Thesis delta

The news article reinforces the market's bullish narrative but does not alter the core DeepValue thesis, which remains that Sezzle is overvalued due to embedded growth expectations and mounting risks. No new data in the article addresses the critical concerns of fee dependence, credit loss thresholds, or regulatory overhangs highlighted in the report. Thus, the thesis persists: Sezzle offers limited upside with asymmetric downside, warranting a sell or avoid stance until risks are mitigated or the price reflects a more attractive entry point.