The Sezzle Inc (ASX: SZL) share price has risen by around 9% in the month of August to date.
Sezzle is a buy now, pay later business that predominantly has operations in the US, though it has aspirations to expand internationally as well.
Investors may react to news in different ways. Some people may decide to sell on news whilst other investors may decide to buy.
There have been two pieces of important news that may have affected things.
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Sezzle's quarterly update
At the end of July, Sezzle released its 2021 second quarter update.
It said that it reached new highs in the second quarter of 2021 for underlying merchant sales (UMS), active consumers, active merchants and repeat usage.
UMS for the three months to 30 June 2021 increased by 118.7% year on year to US$411.1 million. That was an increase of 9.6% quarter on quarter.
The business reported its income as a percentage of UMS remained steady year on year at 5.9%.
Over the 12 months to 30 June 2021, active customers increased by 95.5% to 2.9 million. It added more than 250,000 active consumers in the quarter.
Management were pleased to report that Sezzle's consumer profile continued to improve as active consumer repeat usage grew to 91.6%. That was the 30th consecutive month of improvement.
More than 6,200 active merchants were added in the quarter, bringing the total active merchants to 40,200.
Canada continues to grow rapidly as a source of UMS which now has a run-rate of more than US$100 million during the quarter. Canadian active merchants and active consumers saw year on year growth of 275% to more than 2,500 and 150,000 respectively.
The Sezzle share price fell 8% in early reaction to this update.
Afterpay Ltd (ASX: APT) takeover
A few days ago, investors learned of the huge takeover offer of Afterpay by Square.
At the time of the announcement, it valued Afterpay at $39 billion. But Afterpay shares continue to climb.
Afterpay shareholders are expected to receive a fixed exchange ratio of 0.375 Square shares for each Afterpay share they own.
Square said that buy now, pay later presents an attractive opportunity supported by shifting consumer preferences away from traditional credit, especially among younger consumers, consistent demand from merchants for new ways to grow their sales and the global growth in omnichannel commerce.
Investors sometimes like to use the valuations of other businesses in the same sector to get a ballpark figure to value the business they're looking at. The Afterpay valuation – which is rising – may be giving the Sezzle share price some impetus.
The broker Ord Minnett rates Sezzle shares as a buy with a price target of $10.60. Ord Minnett thinks there may be other mergers and acquisitions in the space.
