Sezzle down 11% after Hindenburg says short on stock

Investing.comDec 18, 2024 5:10 PM

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Investing.com -- Shares of Sezzle Inc (NASDAQ:SEZL) tumbled 15% on Wednesday after short-seller Hindenburg Research disclosed it was short on the “Buy Now, Pay Later” company, accusing it of risky lending practices and misleading investors.

Hindenburg alleged Sezzle uses expensive capital to issue high-risk loans while losing both customers and merchants.

Sezzle did not immediately respond to Investing.com request for comment.

“Sezzle borrows at a 12.65% interest rate to lend to extremely high-risk consumers whose credit is so bad that they are unable to access traditional credit cards or loans,” report said.

The report also highlighted a drop in active merchants since 2021 and raised concerns over insider stock sales and undisclosed margin loans by the CEO. The short-seller also claimed Sezzle inflated subscription revenue, drawing consumer complaints.

Hindenburg said Sezzle, which trades at a premium valuation of 5.5 times forward sales, representing a 63% premium, is unlikely to survive long-term.

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