Shares of buy-now-pay-later lender Sezzle cratered 28.4% to $127.80 after the company reported a second quarter that, on paper, looked stellar. Revenue surged 51.7% year over year to $149.7 million, beating Wall Street's $136.4 million estimate by nearly 10%, while adjusted earnings per share of $1.13 topped the $1.02 consensus by 11.3%. The sell-off — wiping roughly $2 billion from the company's market capitalization — reveals a market that had already priced in perfection and now fears the music is slowing.
The Growth Slowdown Wall Street Actually Heard
Management guided for revenue growth to slow to roughly 30% in the second half of 2026 and flagged that its revenue yield — the percentage of each transaction dollar Sezzle keeps — would normalize to 11.4% from elevated Q2 levels.
Leading into the earnings release, SEZL shares had surged approximately 106% over the preceding three months , so even a hint of deceleration gave profit-takers a reason to exit.
A Marketing Bill That More Than Doubled
Marketing expenditures surged to $19.4 million in Q2, more than double the $8.8 million spent in the prior quarter and up from $8.8 million a year earlier.
Non-transaction-related operating expenses — costs like staff, marketing, and overhead that aren't directly tied to processing orders — rose 0.9 percentage points as a share of revenue to 29.0%.
Sezzle says it will moderate marketing spend in Q3 , but investors saw margin pressure where management sees investment.
Subscribers Soared — but Can They Pay Off?
Active subscribers hit 854,000, a 76.4% year-over-year jump and the largest quarterly net addition of 140,000 subscribers since the program's inception. That growth is the rationale behind the heavy spending, yet net income margin still declined 0.8 percentage points to 27.2% , raising questions about whether subscriber economics justify the cost.
Analyst Community Splits on What Comes Next
Keefe, Bruyette & Woods cut its price target from $190 to $155 and downgraded the stock to "Market Perform."
Needham took the opposite view, lifting its target from $166 to $172 while maintaining a "Buy" rating.
Management framed the results as supporting its third guidance raise of the year, lifting adjusted net income to $185 million and adjusted EPS to $5.25. The disconnect is clear: Sezzle is growing fast and profitably, but the stock's prior rally left no room for anything less than acceleration — and investors got deceleration instead.