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

Sezzle

18/12/2024 18:17

(Adds analyst quote in paragraphs 6-7, updates prices in
paragraph 2, data on short interest in paragraphs 11-12, graphic
on stock performance)
    By Manya Saini and Niket  Nishant
       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.
    The 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 22% lower.   
    "Filings show 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," 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 , alleged Sezzle was rapidly losing
customers and merchants. 
    Sezzle did not immediately respond to a Reuters request for
comment. Reuters could not independently confirm the claims of
the Hindenburg report.
    "The key thing is to promptly address the accusations. And
not only by words, but also by deeds," said Odysseas
Papadimitriou, CEO of personal finance firm WalletHub. 
    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 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.
    "Unsecured subprime lending is a very tough business. It's
very difficult to be profitable over the term and requires a
very experienced analytical and disciplined team," Papadimitriou
added.
    In November, Sezzle raised its forecast for full-year
adjusted profit and revenue growth.
    Short interest in the stock accounts for 2.72% of the free
float, according to data from analytics firm Ortex.  
    Short sellers, who typically sell borrowed securities and
aim to buy these back at a lower price, are looking at paper
gains of $5.7 million, off a roughly 23% decline in share price.
     

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Sezzle's 2024 stock performance    https://reut.rs/41I9V3I
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 (Reporting by Manya Saini in Bengaluru; Editing by Krishna
Chandra Eluri)
 ((Manya.Saini@thomsonreuters.com; X: manya__saini;))