Sezzle in $86m capital raise as buy now, pay later booms – Sydney Morning Herald

Fellow financiers Afterpay, Zip and Splitit have seen similar eye-watering growth, with Afterpay recently completing a $1 billion capital raise. Afterpay’s shares today are trading close to an all-time high at $74.68, up 750 per cent since March.
In the weeks leading up to Afterpay’s raise, brokers’ had begun to raise their price targets on the controversial stock, with some nearly doubling their predictions as its astonishing growth and a prevailing fear of missing out made them rethink their $30 and $40 estimates.
“This capital raising will give us the ability to invest in these initiatives as well as fortify our balance sheet.”: Sezzle founder and CEO Charlie Youakim.Credit:Wayne Taylor
It’s been a similar story for Sezzle, with analysts at Ord Minnett more than doubling their targets since late April, most recently hiking them 50 per cent from $4 to $5.95 on Wednesday. Today, Ord Minnett was announced as the sole bookrunner and underwriter for Sezzle’s placement.
Royal Bank of Canada analyst Tim Piper also recently put a $5.50 target price on Sezzle, up 83 per cent from his $3 target in late May. Today, Mr Piper said he approved the choice to raise capital and remained bullish on the stock, saying he saw strong potential for additional growth.
“We expect a continued improvement in net transaction margins over the medium term as Sezzle gains scale, improves processing and funding costs, and as gross loss rates decline beyond 2021,” he said.
Sezzle plans to use the funds to chase more customers, invest in marketing, international expansion opportunities, and more product features. The company will also use the raise to buffer its balance sheet.
The company recently announced it had achieved record merchant sales across the second quarter, growing 348 per cent on the prior year to $US188 million. Active customers also spiked 28 per cent to 1.48 million.
“Our strong

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