Sezzle's Strategic Pivot and Mispriced Options Present a High-Conviction Play, Analysts Say
Sezzle's Strategic Pivot and Mispriced Options Present a High-Conviction Play, Analysts Say
NEW YORK – A nuanced investment case is building around Buy Now, Pay Later (BNPL) provider Sezzle Inc. (NASDAQ: SEZL), focusing on its operational evolution and what some analysts see as a mispriced derivative opportunity. The thesis, recently elaborated by financial research outlet OppCost, suggests investors can leverage the company's strengthened fundamentals through a structured options trade.
As of late January, Sezzle shares were trading around $70.51. The company, which operates primarily in the U.S. and Canada, has undergone a significant transformation from a pure-play transactional BNPL service to a broader, subscription-driven financial ecosystem.
The Core Trade: Monetizing Lingering Uncertainty
The proposed strategy involves selling long-dated put options—specifically the April 2026 $55 strike puts—to collect an upfront premium. This approach, as outlined, banks on the market's residual regulatory anxiety overshadowing the sector, despite a key regulatory relief from the Consumer Financial Protection Bureau (CFPB) in May 2025 that removed a major overhang for BNPL firms.
"The trade structure offers a substantial downside cushion of approximately 26% from the current price," the analysis notes, highlighting a breakeven point around $45.50. "It's a play on volatility being priced higher than the fundamental risk warrants, post-regulatory clarity."
Fundamentals Fueling the Thesis
Analysts point to Sezzle's strategic pivot as the bedrock of the bullish case. The launch of "Sezzle Premium" and credit-building tool "Sezzle Up" has shifted revenue toward more predictable recurring streams, improving customer loyalty and credit quality. Meanwhile, the "Sezzle Anywhere" virtual card expands its reach beyond partner merchants, positioning the platform as a potential neo-banking wallet.
Financially, the company has guided for strong FY2026 earnings, with an EPS projection of $4.35. Its valuation, trading at a forward P/E multiple far below many high-growth fintech peers, appears disconnected from its ~67% revenue growth and a robust Rule of 40 score near 90, signaling efficient growth.
Market Context and Alternative Views
This isn't the first bullish call on Sezzle. A similar thesis in May 2025 highlighted its profitable model shift, though the stock has declined roughly 22% since. Proponents argue the core subscription narrative remains intact, providing resilience. Notably, Sezzle did not rank among the 30 most popular stocks in hedge fund portfolios at the end of Q2, though institutional holdings increased from the prior quarter.
"While Sezzle presents a structured opportunity, we continue to see greater risk-adjusted potential in select AI equities," a contrasting view from our analysis suggests, pointing to other sectors with powerful near-term catalysts.
Reader Reactions: A Spectrum of Opinions
Michael R., Portfolio Manager in Chicago: "The derivative angle is sophisticated. It acknowledges the stock's past volatility but uses it as an asset. Selling those long-dated puts to finance exposure is a classic 'have your cake and eat it too' move if you're fundamentally bullish but want a margin of safety."
Sarah Chen, Fintech Analyst at a West Coast VC Firm: "The shift to a subscription ecosystem is the real story here. It mitigates the cyclicality of pure BNPL and builds a deeper relationship with the consumer. That's what justifies looking past near-term price noise. The options strategy is just a clever wrapper for that core investment."
David K. (Online Commenter): "This is just another attempt to dress up a falling knife. The stock is down over 20% since the last 'bull case' was pitched. BNPL is a commoditized, regulatory target. Selling puts for premium is a gamble that it won't fall further—hardly a 'high-conviction' strategy for the average investor."
Lisa Ambrose, Retail Investor from Texas: "As a user of Sezzle Premium, I see the value firsthand. They're building a real financial product suite, not just a checkout loan. The analysis on recurring revenue makes sense to me. It feels more sustainable than the old model."
Disclosure: This article is for informational purposes only and does not constitute investment advice. The author holds no position in SEZL.
READ NEXT: 30 Stocks That Could Double in Three Years and 11 Under-the-Radar AI Stocks to Consider Now