Sezzle Inc Shares Drop 15% Amid Short-Seller Allegations

Shares of Sezzle Inc (NASDAQ: SEZL) fell 15% on Wednesday after Hindenburg Research revealed a short position, accusing the "Buy Now, Pay Later" company of risky lending practices and misleading investors.

Hindenburg claimed that Sezzle relies on expensive capital to provide high-risk loans, resulting in a loss of both customers and merchants.

Sezzle has not yet responded to requests for comment from Investing.com.

The report stated that “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.”

The investigation also noted a decline in active merchants since 2021, raising concerns over insider stock sales and undisclosed margin loans by its CEO. Furthermore, Hindenburg accused Sezzle of inflating subscription revenue and highlighted consumer complaints.

With Sezzle trading at a premium valuation of 5.5 times forward sales, this represents a 63% premium, leading to doubts about its long-term viability.