Sezzle Inc. Stock Drop Lawsuit Investigation (2024)
We are investigating whether Sezzle Inc. (NASDAQ: SEZL) misled or provided false statements to investors in violation of federal securities laws. This potential lawsuit seeks to help Sezzle Inc. shareholders recover their losses.
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Why is Sezzle Inc. (NASDAQ: SEZL) Stock Dropping?
On December 18, 2024, Hindenburg Research published a report alleging that Sezzle Inc. makes “extremely risky” loans with interest rates of 12.65% in order to create the appearance of near-term growth. Sezzle’s earnings growth in 2024 appears to be “significantly driven” by rapidly issuing these lower-quality loans, according to Hindenburg.
Merchants are also purportedly abandoning Sezzle’s platform, “with the company reporting only 23,000 active merchants,” down 51% since 2021. Hindenburg further claims that these numbers may even be exaggerated, and it only found evidence of 6,776 merchants on its website.
The Hindenburg report maintains that Sezzle’s partnerships with key merchants like Target have “quietly failed,” despite previously touting these relationships to investors. Sezzle also appears to be “boosting its near-term subscription numbers with sketchy enrollment practices” like enrolling users into recurring monthly subscriptions without their knowledge, as alleged in the Hindenburg report.
Additionally, Hindenburg noted that Paul Purcell, partner and co-founder of one of Sezzle’s key pre-IPO investors (Continental Investment Partners), resigned from Sezzle’s board on June 6, 2024. He has since disclosed share sales representing over 87% of Continental’s holdings in Sezzle, totaling $55.7 million.
Following this news, shares of Sezzle Inc. dropped over 25% in intraday trading on December 18, 2024, causing significant harm to investors.
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