Bnpl Lender Sezzle Plunges As Short: seller Hindenburg Research takes aim

Sezzle

18/12/2024 17:31

Dec 18 (Reuters) - Buy now, pay later firm Sezzle's
 SEZL.O  shares plunged on Wednesday after Hindenburg Research
disclosed a short position, citing risky lending practices
alongside a decline in customers and merchants.
    Sezzle's stock, which has gained over 1,000% so far this
year, fell as much as 28.6% to $225 earlier in the session,
before paring some losses. It was last trading 14% lower.  
    "Our findings show Sezzle is borrowing expensive capital to
make extremely risky loans through a struggling platform that is
rapidly losing customers and merchants," the short seller said.
    Hindenburg, which was behind an over $100 billion market
rout in India's Adani Group  ADEL.NS  and had also taken aim at
Jack Dorsey-led Block  SQ.N , added Sezzle insiders have been
selling stock or cashing out through a massive margin loan.  
    Sezzle did not immediately respond to a Reuters request for
comment. Reuters could not independently confirm the claims of
the Hindenburg report.
    BNPL is a financing option that allows consumers to make
purchases and pay for them over time, typically in a series of
installments. It exploded in popularity in 2020 after the
COVID-19 pandemic forced more shoppers online. 
    As most BNPL providers do not report their loans to the
credit reporting agencies, there is scant data regarding
delinquencies.
    In November, Sezzle reported Underlying Merchant Sales were
up 40.6% year-over-year for the quarter ended Sept. 30. 
    It also raised its forecast for full-year adjusted profit
and revenue growth. 
    Founded in 2017 by Nathan Anderson, Hindenburg is a forensic
financial research firm that analyses equity, credit and
derivatives.
    Hindenburg invests its own capital and takes short positions
against companies. After finding potential wrongdoings, the
company usually publishes a report explaining the case and bets
against the target company in the hopes of making a profit.
    Short sellers typically sell borrowed securities and aim to
buy these back at a lower price.
    

 (Reporting by Manya Saini in Bengaluru; Editing by Krishna
Chandra Eluri)
 ((Manya.Saini@thomsonreuters.com; X: manya__saini;))