Core Insights - The buy now, pay later (BNPL) business model is experiencing rapid growth, with PayPal reporting a 20% increase in payment volume through its BNPL product in Q1 [1] - PayPal's BNPL customers are notably active, spending 33% more and conducting 17% more transactions compared to other users [2] - Despite the growth in BNPL, PayPal's overall revenue increased by only 2% on a constant currency basis, indicating it is not currently a high-growth stock [2] PayPal - PayPal is focusing on the BNPL segment due to the higher spending and transaction frequency of BNPL customers [2] - The company is facing challenges in maintaining growth, as evidenced by its modest revenue increase [2] Sezzle - Sezzle reported exceptional revenue growth of over 123% in Q1, alongside a significant increase in adjusted operating margin by over 1,600 basis points compared to Q4 2024 [3] - The company achieved an adjusted net income margin of over 34%, significantly outperforming competitor Affirm's margin of less than 1% [4] - Sezzle raised its revenue growth guidance for 2025 from 25% to over 62% and increased its adjusted earnings per share guidance by 47% to $3.25 [5] - Following its strong Q1 results, Sezzle's shares surged over 42% [5] - Analysts at B. Riley raised their price target on Sezzle by 60% to $101 per share, indicating a potential upside of around 12% [6] Affirm - Affirm experienced a revenue increase of 36% in the last quarter and raised its guidance for the next quarter, although the increase was less than expected, leading to a 14% drop in shares [8] - Affirm's partnership with Costco, which has an estimated e-commerce revenue exceeding $11 billion in 2024, is a significant development that could enhance its gross merchandise volume (GMV) [11][12] - Costco's e-commerce sales growth rate of 22% on a constant currency basis positions Affirm favorably compared to smaller competitors like Sezzle [12] Market Positioning - Sezzle and Affirm represent two distinct investment opportunities within the growing BNPL industry, with Sezzle being a smaller, rapidly growing player and Affirm being a more established company with significant partnerships [13]

Group 1 - eBay has expanded its partnership with Klarna to offer buy now, pay later (BNPL) options to American consumers, allowing them to split eligible purchases into four interest-free payments or choose longer-term financing [1][2] - Klarna's BNPL services have already been available to eBay shoppers in several European countries, and the company has introduced a resale feature in its app that simplifies the process of listing previously purchased items on eBay [2][3] - Since December 2024, Klarna's resale feature has generated over 500,000 new eBay listings, including refurbished electronics and preowned fashion items [3] Group 2 - Klarna has a significant presence in brick-and-mortar retail, with a recent partnership with Clover enabling installment payments at over 100,000 stores [3] - eBay is also expanding its payment acceptance through a partnership with Checkout.com and has added Venmo as a checkout option for U.S. customers [4] - The consumer popularity of BNPL continues to grow, with 38% of American consumers using BNPL as of late 2024, and BNPL transactions in the U.S. valued at $175 billion [5][6]