Why is the Zip and Sezzle share price looking up today?
Shares in the 2 BNPL operators tumbled 60-70% in the last 6 months but are trading up today.
At the time of writing, Zip Co shares had jumped 5.4% at $3.10, while Sezzle shares were up 2.6% to $2.40. Smaller rival Splitit (ASX: SPT) was also up 2.3%.
Why investors are cheering the Zip and Sezzle stock price
Investor sentiment in the BNPL firms has likely improved after Sezzle on Monday provided a better than expected trading update for the December quarter.
The US-focused operator posted a 75% jump in underlying merchant sales (UMS) from a year ago to US$561 million (A$770 million). Active merchants rose 76% year on year to 47,000, while active consumers also grew 51.5% year on year to hit 3.4 million at December-end.
Sezzle also said it has signed up retail giant IKEA, with Sezzle to be its preferred BNPL partner in the US and Canada markets.
“Our 4Q21 results demonstrate our strong secular growth, as we reached new highs in UMS, Active Merchants, and Active Consumers. We are also enthusiastic about our in-store growth reflecting the significant opportunity to be more than just an online option for consumers,” CEO Charlie Youakim said in a statement to the ASX.
The encouraging numbers come just days after both BNPL companies confirmed merger discussions that could create the largest pure play BNPL operator on the ASX.
Sezzle did not provide any update on the talks on Monday, but last week, Zip Co had said the discussions were preliminary in nature and there was no certainty of a deal.
The market has long speculated about a merger between Zip Co and Sezzle but a confluence of factors, including a ramp up in competition, looming interest rate increases and rising regulatory risks facing the sector, seem to have put those discussions on a strong footing now.
Investors would be hoping Sezzle’s strong December quarter performance will put the potential combination on a stronger footing to face the coming challenges.
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