Sezzle (SEZL) vs. Affirm Holdings (AFRM) : Which Buy-Now-Pay-Later Stock Is a Stronger Buy?

The buy-now-pay-later (BNPL) market has really been sizzling of late. Undoubtedly, American consumers have been feeling quite the pinch from inflation. And while the full impact of Donald Trump’s tariffs may yet to be felt, I do think that many younger consumers who still “need” to have a certain good, whether it be Labubus or some other trendy, pricey item, can go down the route of a BNPL service to buy now with the intent of paying (and worrying) later.

It’s not just BNPL that makes rising fintech stars like Australia’s Sezzle (NASDAQ:SEZL) or America’s own Affirm (NASDAQ:AFRM | AFRM Price Prediction) an intriguing addition to a speculative growth portfolio, either. As is the case with many up-and-coming fintechs, there’s room to expand into new verticals with new-age tech in hand to reinvigorate growth.

In any case, let’s stack up the two standout contenders in the BNPL scene to see which one is a worthier bet for investors keen on cashing in on rising demand for flexible payment options.

Sezzle

Sezzle stock has cooled down over the past month, plunging into bear market territory (down 21% from recent all-time highs) after a sizzling-hot triple-digit percentage melt-up just in time for summer. Even after the latest correction, SEZL shares may still be too hot to handle. Even Mad Money host Jim Cramer thinks it’s time to ring the register. After a 970% gain in the past year (that’s nearly a 10-bagger), he’s not wrong to encourage profit-taking, even if Sezzle continues to fire on all cylinders going into its early-August earnings.

Undoubtedly, it’s going to be tough to top Sezzle’s first quarter, which saw off-the-charts sales and earnings growth. Whenever you have revenue growth and margins on the right track, you could have the formula for a timely multi-bagger.

As Sezzle introduces new tech-driven innovations (think the new Pay-in-5 feature) to grab more share from rivals, it’s tough to throw in the towel on a name that’s showing it has what it takes to be one of the most disruptive payments plays on the scene.

In the meantime, it’ll be interesting to see how the firm’s antitrust suit against Shopify (NASDAQ:SHOP) goes. If it goes Sezzle’s way, it could become an even bigger force in digital payments.

For now, I’m sitting on the sidelines going into the second quarter, given the hefty 44.3 times forward price-to-earnings (P/E) multiple and the potential for momentum to really reverse course. Indeed, whenever expectations are so elevated, even a strong number could fail to move the needle higher.

Affirm

Affirm stock isn’t nearly as blistering as Sezzle, but it’s still on an impressive run, now up close to 150% in the past year alone.

With the $22 billion payments play recently winning a big upgrade from an analyst over at Oppenheimer (along with an $80 per share price target), who praised the firm as a “leader,” I do think Affirm appears more ripe for buying as it uses its size to its advantage.

Additionally, if Sezzle has its way with Shopify, it’ll be a win for the broad basket of BNPL firms. In the meantime, look for Affirm to keep teaming up with digital retailers while embracing new tools, like AI, to keep growth going strong.

While Sezzle stands out as a growthier (and profitable) bet, I’m inclined to stick with the more mature Affirm despite its lack of profitability. It has the largest network of merchants and consumers, which I view as a source of an economic moat, especially as consumers seek greater financial flexibility with payment options. Though Sezzle and other BNPL players are closing the gap, I think it’ll be tough to catch Affirm as it continues flexing its impressive AI muscles.