Plenty Of Sezzle With This One

Sezzle is Canada’s leading buy now pay later (BNPL) company. It is similar to Klarna in the UK or Afterpay in Australia and the US. I have recommended BNPL shares twice, first Afterpay and then US-quoted Affirm. Both shares boomed and then busted. Sezzle was quoted in Australia but delisted there and is now quoted on Wall Street.

It is growing fast and is expanding into other banking-related areas. The shares had a rocky start but look good now.

Sezzle Growing Explosively

The business is growing explosively.

Our total subscriber count increased by 91,000 during the quarter to 462,000 and our consumer engagement continues to grow as evidenced by the top 10pc of consumers transacting an average of 70 times per year. This number stood at 53x at the end of Q1. We continue to strongly exceed the rule of 40, no matter how one slices the equation. The Rule of 40 is a principle that states a software company’s combined revenue growth rate and profit margin should equal or exceed 40pc. SaaS companies above 40pc are generating profit at a sustainable rate, whereas companies below 40pc may face cash flow or liquidity issues. Last quarter, we also discussed another measuring stick of 20, 60 to 20, which equates to 20-plus percent revenue growth, 60-plus percent gross margin and 20-plus percent net income margin.

We came very close to achieving each of these metrics in Q2, but fell just short of the gross margin line. Nonetheless, great results for the quarter. I guess one could say that we created our own rule of 100.

Charles Youakim, CEO, Sezzle, Q2 2024, 10 August 2024

Sezzle is early in its growth story but already showing the discipline that could make it a great business.

However, I don’t think people outside of Sezzle will truly appreciate the laser focus on improving bottom line results. It is woven into every decision that we make from revenue-generating activities to cost-saving initiatives.

A key part of the formula for increasing profitability is increasing the lifetime value of our consumers. The launch of our premium and anywhere subscription product is a great example of us finding a way to increase the lifetime value of our consumers with products they truly love. We continue to have an eye on new product offerings our consumers need and want and enhancing those that we already provide them, all with the goal of improving retention, frequency and satisfaction.

We believe we have numerous opportunities to continue to enhance the consumer experience with Sezzle and thus continue to drive top and bottom-line results. A key part of enhancing lifetime value is providing products that consumers need, which we believe will lead us to acquiring more new users. I’m happy to say that we are seeing green shoots in this area.

Charles Youakim, CEO, Sezzle, Q2 2024, 10 August 2024

Plenty is going on at Sezzle which recently launched a tie-up with WebBank.

Buy now, pay later (BNPL) firm Sezzle plans to have WebBank serve as its exclusive bank to originate and finance products offered through the Sezzle platform, including its Pay-in-2 and Pay-in-4 products.

The two companies entered into a strategic partnership program by executing a loan and receivables sale agreement and marketing and servicing agreement on Monday (Aug. 26), Sezzle said in a Wednesday (Aug. 28) filing with the Securities and Exchange Commission.

Subject to completion of confirmatory testing and procedures, the program is expected to launch in September, according to the filing.

Under the agreement, WebBank will also serve as the exclusive issuer of all Sezzle subscription products and of Sezzle card products, per the filing.

“WebBank, through Sezzle’s marketing efforts, will offer loans to U.S. customers to finance purchases of merchant products through the Sezzle platform or within Sezzle’s direct merchant network,” the filing said. “Sezzle, subject to WebBank’s review and approval, will act as the administrator of the program and master servicer, with responsibility over the marketing, administration, legal and compliance, application of WebBank’s underwriting criteria, origination assistance, and ongoing servicing functions.”

Sezzle CEO Charlie Youakim said Aug. 7 during the company’s quarterly earnings call that Sezzle was nearing the completion of its implementation with a bank sponsor partner.

The benefits of the sponsorship are expected to include the launch of unified fees; a streamlined regulatory approach; and future potential consumer product launches, including checking accounts, cash advances and credit-building products, Youakim said.

Wednesday’s SEC filing comes on the same day Sezzle said it teamed up with embedded finance platform Liberis to launch Sezzle Capital, a program designed to help small and medium-sized businesses (SMBs) get financing without sacrificing equity.

The program is designed to offer “flexible funding” to SMBs in the U.S., and there are plans to eventually launch in Canada.

“At Sezzle, we’re committed to empowering the next generation of business owners through accessible funding opportunities for merchants of all sizes,” Youakim said in a Wednesday press release announcing the collaboration. “Through our partnership, we’re thrilled to offer our merchants funding via Liberis — without the need to give up equity in their businesses.”

PYMNTS, 28August 2024

Share Recommendations (27 September)

Sezzle. SEZL

Futu Holdings. FUTU

Bitcoin. BTCUSD

Microstrategy. MSTR

Futu Holdings Still A Fraction Of Its Potential Size

I have always felt that Hong Kong-based stockbroker and wealth manager, Futu Holdings, had the potential to be an exciting performer. The shares soared in 2020/ 21 driven by explosive growth and then suffered a meltdown in 2022 as US interest rates soared. Nevertheless, the business remained solid and growth is now reaccelerating. The chart looks promising.

In the second quarter, we acquired 155,000 paying clients, representing 168pc year-over-year growth. By the end of the quarter, we crossed the 2m paying client milestone translating into a 29pc growth year-over-year, and 8pc growth quarter-over-quarter. Six months into 2024, we have achieved over 80pc of our full year new paying client guidance. Given the strong and year today momentum, we would like to raise our guidance again to 550,000 new paying clients in 2024.

Leaf Li, CEO and founder, Futu Holdings, Q2 2024, 24 August 2024

The company continues to introduce new products.

One major product update is our recent launch of cryptocurrency trading in Hong Kong and Singapore. Compared to some other markets we operate in, we believe that the penetration of crypto in Hong Kong and Singapore has much room for growth given their supportive regulatory environment, rising awareness of virtual assets and the emergence of more user-friendly virtual asset trading platforms.

The adoption curve will not be linear and obviously highly subjective to market sentiments. But when we develop our product roadmap, we think less about short term monetisation than offering a broader portfolio with asset classes with low correlation to help our clients navigate market cycles and thus drive higher client wallet share.

Leaf Li, CEO and founder, Futu Holdings, Q2 2024, 24 August 2024

The wealth management business goes from strength to strength.

Wealth management recorded another quarter of exceptional growth, as our clients saw diversification and continue to part more funds in safer assets like money market funds in U.S. treasury bills. Total client assets grew by 84pc year-over-year and 25pc quarter-over-quarter to around HKD80bn. As of quarter end, wealth management assets accounted for 14pc of our total client assets and over 25pc of paying clients help wealth management positions.

Leaf Li, CEO and founder, Futu Holdings, Q2 2024, 24 August 2024

The company remains confident in its prospects. Leaf Li had this to say in answer to a question.

So far, we do not have any concrete dividend policy. The key reason is we think still there are huge growth potential areas where we can further deploy our capital.

Leaf Li, CEO and founder, Futu Holdings, Q2 2024, 24 August 2024

Chinese shares generally look to be waking up as China moves to a more reflationary stance.

Bitcoin Poised To Explode – $1m Here We Come!

One of the most famous Bitcoin HODLs (hold on for dear life) is Michael Saylor, chairman of Microstrategy.

Bitcoin is a bank in cyberspace, run by incorruptible software, offering a global, affordable, simple, & secure savings account to billions of people.

Michael Saylor, recently

What Saylor has done is extraordinary, betting the future of his company on Bitcoin. It is extraordinary that he wanted to do it, that he was able to do it and that he held his nerve while doing it. And he is still doing it. Microstrategy has just done another convertible issue and bought another $500m of Bitcoin taking the company’s stake to 1.2pc of all the Bitcoin in issue. He will carry on buying to $1m and beyond if that should happen, which makes Microstrategy an attractive way to buy Bitcoin.

Below is an article I found, a letter to people who might invest in Bitcoin explaining why they should. It is long but worth reading. I have resolved that I will never be without exposure to Bitcoin because it looks poised to explode, maybe not now, not next year but one day and when it does I think the results could be awesome!

Imagine if the price suddenly erupts through $100,000. The chart will look incredible, money will flood into Bitcoin ETFs from all around the world and corporations and governments will look at the success of Saylor’s strategy at Microstrategy, take him more seriously and maybe copy what he has been doing. If all that happens there could be a massive supply shock with no sellers and a flood of buyers.

This may never happen but as the letter below suggests Bitcoin has a lot going for it and it could. I think it will.

Why Bitcoin is special

It should be obvious by now, but I’m afraid I’ll have to spell it out anyway: Bitcoin, not blockchain. Bitcoin, not crypto. Bitcoin, not distributed ledger technology. Bitcoin, not DeFi. Bitcoin, not Web3. Bitcoin, not CBDCs. Bitcoin, not yield farming. Bitcoin, not centralized neo-banks that sell you fractional-reserve paper bitcoin. Bitcoin.

If you think that Bitcoin is dead, you’ve been fooled by fiat journalists. If you think that Bitcoin is slow, or old tech, or MySpace, or the Model T, you’ve been fooled by snake-oil salesmen. [This letter was written when Bitcoin had dropped from $65,000 to $16,000). 

There is Bitcoin and there is everything else.

You have to understand that Bitcoin is not an app, or a company, or a stock, or an investment. Bitcoin doesn’t have a board of directors, or a CEO, or quarterly earnings. There is nobody “behind” Bitcoin.

Many bitcoiners have strong opinions when it comes to bitcoin vs. “crypto”—and for good reason. One is a breakthrough of enormous proportions. The others are cheap imitations, copy-cats that have been riding the coattails of said breakthrough for way too long, confusing noobs [investors who are new to Bitcoin] and retail investors alike. “Crypto” is nerds re-discovering money printing and pyramid schemes. Seemingly free lunches propped up by perpetual motion machines that run on technobabble.

Crypto does not compare to Bitcoin. If you want to compare Bitcoin to something else, compare it to fire, the number zero, the wheel, the printing press, or electricity. Yes, it is that important. It is an autopoietic network that is internally stable and can’t go bankrupt [An autopoietic system is a network of inter-related component-producing processes that generate the same network that produced them. It is a concept introduced to differentiate living systems from non-living systems.]. The antidote to the corruption of money.

It is an entirely new thing, something that is so profound, so alien, so novel that most people fail to appreciate it. I don’t blame them. Most people know nothing about cryptography, or networks, or money, or open protocols. Consequently, most people are easily fooled. 

What is so revolutionary about bitcoin?

• Bitcoin is absolutely scarce
• Bitcoin’s issuance is fixed in time
• Bitcoin can be stored in your head
• Bitcoin can be sent at the speed of light
• Bitcoin can be verified by anyone, easily and cheaply

Every single one of these points is revolutionary in itself. 

We never had a liquid asset that is absolutely scarce. We never had a man-made currency that didn’t have an issuer. We never had a marketable good that was just words, something that still blows my mind to this day: learn 12 words by heart, and you can flee your country with your wealth intact. We never had high-velocity money without having to rely on credit. 

Allow me to repeat the last point for emphasis: for the first time in human history, we have a money that is pure information—something that stores value in bits and bytes directly, without having to rely on a trusted third party—and because it is pure information, it can be sent to anyone at the speed of light. 

Unfortunately, this killer feature of bitcoin is lost on most people: Bitcoin is not credit. It’s not an IOU. Not a promise. Not reliant on any counterparty. Not a liability. Like gold before it, it is not backed by anything. It is the desirable thing itself. It is money. Pure, un-debaseable money.

Whether you’re a rekt crypto bro or a friend of fiat, there is one thing that is especially difficult to accept. The one thing that sets Bitcoin apart: it all works without anyone in charge.

Bitcoin is best understood as a force of nature, like the coming and going of the tide, like the sun rising in the east and setting in the west. You can have an opinion on it, but your opinion doesn’t have any influence on the phenomenon whatsoever. The tide will come and go, the sun will rise and set, and Bitcoin will produce a new block. Every 10 minutes.

Yes, it [the price] did crash. And it will crash again, and again, and again. Like it has in the past.

As of this writing, the bitcoin price is $16,641. Yes, it went all the way to $65,000, and then it crashed all the way down to $16,000. 

Here is what you have to understand:  USD price is both important and unimportant.

Here is how price is important: BTC needs to have a price so that the Bitcoin system can secure itself. Price is correlated to hashrate (which is again correlated with security or, more accurately: settlement assurance). It is also a good indicator of global adoption. And yes, we usually use USD to measure the BTC price because, as of this writing, USD is still the unit of account of this world. Sadly.

To see how price is unimportant, let’s ask some questions and answer them one by one:

• Did the BTC supply change? No.
• Did the network stop? No.
• Can you still send sats to anyone without having to ask for permission? Yes.
• Do holders still hold the same amount of BTC? Yes.
• Can you still easily and cheaply verify all of the above? Yes.

From the point of view of the Bitcoin network, nothing changed.

In other words: the rules of the network did not change. Supply is still limited. Every 10 minutes, new transactions are settled. The monetary policy did not change. The properties of the asset did not change. One BTC still equals one BTC.

Bitcoin worked just as well as it does now when the USD price was zero, which was the case for the first ten months of its existence. Without a central issuer, bitcoin had and still has to grow organically in value, distribution, and security, which is why many people—myself included—believe that Bitcoin’s history can not be repeated, i.e., that a scarce digital commodity is path-dependent.

Speaking of price: it helps to put things in a broader context when talking about any price in the first place. Nominal price is an expression of relationship, and thus any price depends on the unit you use to measure said price. The economic lens that you use to see through and see the world with.

It is worth noting, for example, that the USD M2 money supply has expanded massively in the last couple of decades. The most recent expansion of over 30pc was in large part due to the monetary response to the worldwide lockdowns. In other words: when measuring the value of things in USD, everything is distorted by at least 30pc.

Bitcoiners like to speak of purchasing power because it is irrespective of the nominal value bound to fiat currency measure. Note, for example, that the BTC chart looks very different depending on what you use as measurement, whether its USD (United States dollar), ARS (Argentine peso), NGN (Nigerian naira), VED (Venezuelan bolívar), or—to pick something else entirely—the S&P 500, gold, or barrels of oil. 

In the western world, we are especially oblivious to the fiat lens through which we view the world. We are mostly dealing with “stable” currencies, i.e., currencies that are slowly declining in purchasing power. But make no mistake: all fiat currencies are inflating. If money can be printed, it will be printed. The temptation is simply too strong.

Consequently, all fiat monies are monies of decline. And if this decline happens too quickly—When Money Dies—the distortion in prices becomes obvious. And if the distortion gets big enough, all long-term economic calculation—and with it, regular life—breaks down.

The above charts show two things clearly: fiat currencies are designed to lose purchasing power over time. Bitcoin is designed to monetise naturally over time, and, all things being equal, it will continue to monetise.

It will continue to monetise because bitcoin is valuable. It is your money. Nobody can interfere with it. Nobody can debase it. Nobody can take it from you (when stored properly, that is). Nobody can stop you from using it. In a world of de-platforming, de-banking, and CBDCs [central bank digital currencies], having censorship-resistant, unconfiscatable money is valuable in itself. 

Volatility, volatility, volatility. All this talk about volatility misses the whole point of Bitcoin: deep, systemic stability. 

Bitcoin isn’t volatile. Human psychology is.

Human behavior is volatile. Bitcoin isn’t. Consequently, bitcoin’s market price can be volatile. But Bitcoin is not. The Bitcoin network has been operating continually for well over a decade. It is predictable, steady, and reliable. From that perspective, Bitcoin is the most stable thing there is. 

Every 10 minutes, a new block is found. Every 10 minutes, the whole system increases in reliability and stability, independent of price swings. 

As long as new blocks are coming in, there is nothing to worry about. Once again, the lens you use to look at Bitcoin matters a great deal. Step back. Zoom out. Look at blocks, not price. Time, not yield. Base money, not credit.

But yes, while bitcoin is monetising, swings in purchasing power are to be expected. The sensible response is to adjust your allocation according to your risk appetite. A 0pc allocation is not a sensible position because a 0pc allocation is a 100pc allocation to assets that have substantial counterparty risk or, even worse, assets that aren’t assets in the first place—but liabilities.

But I missed the bus.

No, you didn’t. We are still very early in the unfolding of the bitcoinisation process. Everyone thinks they are late.  Everyone thinks that they have missed the bus.

Most bitcoiners don’t think of Bitcoin as an investment. It is a breakthrough technology that allows you to move wealth through space and time. It is not about getting rich in fiat terms. It is an exit, not a detour. It is about measuring your wealth in sats, not USD, or EUR, or any other currency. Your wealth. Held and controlled by you.

Because of this, it is never too late to use it to your advantage. Just like it’s never too late to adopt electricity or the internet. It is never too late to adopt the Bitcoin Standard.

Start small. Take responsibility. Learn how to self-custody. Produce value, spend less than you make, and start saving in bitcoin. Start counting your wealth in sats.

Sats, short for satoshis, is a denomination of Bitcoin. One satoshi is equal to 0.00000001 Bitcoin, which is the smallest unit of the digital currency. SAT and S are both widely used as abbreviations. Sats are used to measure the amount of Bitcoin someone holds and to make small transactions.

Or don’t. You can also stay in crypto wonderland, buying ape JPGs and shares of Ponzis built on quicksand. You can once again believe all the lies of the next autistic wunderkind, convincing you that fundamentals don’t matter and that principles are worthless. You can also stay in the world of fiat slavery, believing that your money should steal from you (as long as the rate of stealing stays somewhere between 2-9pc), that printing trillions out of thin air is sensible monetary policy, and that central-bank digital currencies are a neat idea.

In either case, Bitcoin doesn’t care. But when (not if) the next centralised abomination implodes, and when (not if) bitcoin reaches new heights again, and when the mainstream media screams “bubble” again, and when bitcoin’s price will once more correct after that, and when fools are once again parted with the coins that they thought they held, remember this: you could’ve known better.

Good luck.

Jack Mallers, CEO, Strike, written when Bitcoin was around $16,000