Sezzle falls after Hidenburg highlights ‘extremely risky loans’ in short report

In a newly-published short report, Hindenburg Research says Sezzle (SEZL) is a “Buy Now, Pay Later” company whose stock is up 2,015% in the last year, driven by investor confidence that it is a growing, profitable business, but the firm claims Sezzle is “borrowing expensive capital to make extremely risky loans through a struggling platform that is rapidly losing customers and merchants. All the while, insiders are selling stock or cashing out through a massive margin loan.” 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 or loans and use BNPL options for otherwise everyday purchases. Sezzle’s earnings growth in 2024 appears significantly driven by rapidly issuing lower-quality loans,” according to the short-seller. Following the report, Sezzle shares have fallen 21% to $247.98.