Sezzle Inc. (SEZL) Investigation

The investigation is focused on the sustainability of Sezzle’s business model.

Sezzle offers financing options that allow consumers to make purchases and pay for them over time, typically in a series of installments. Sezzle has ridden the BNPL wave of popularity over the past year, as rising inflation has forced shoppers to look for new and creative financing options. This has caused Sezzle’s stock to surge, climbing over 1,000% along with a rise in its merchant sales.

But on Dec. 18, famed short seller Hindenburg raised serious questions about the sustainability of Sezzle’s business model. Hindenburg notes that Sezzle is drawing against a line of credit with an exorbitant annual interest in excess of 12% to fund high-risk loans to subprime borrowers unable to get credit cards or access to other normal forms of financing. 

Moreover, the report questions the sustainability of Sezzle's merchant partnerships. Hindenburg claims that key partnerships, such as the one with Target, have not materialized as expected. According to the report, the company's active merchant count has also declined significantly, raising doubts about its long-term growth prospects.  To make matters even riskier, Sezzle’s Chairman and CEO has pledged $542 million in shares as collateral for a margin loan, representing ~30% of the company’s total shares.

The report claims Sezzle’s customer base has also contracted, with a 20% decrease in active customers since 2021. Despite this decline, the company has reported substantial growth in its subscription products. Hindenburg alleges that Sezzle may be artificially inflating its subscription numbers through questionable enrollment practices.

The report also highlights a spike in consumer complaints against Sezzle.

Hindenburg suggests that insiders recognize that Sezzle is a ticking time bomb, as insiders have sold approximately $71 million in stock this year, including a key pre-IPO investor who has reduced their stake by 87%.  

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the SEZL investigation about?

We are investigating whether the company misled investors about its business model.

WHAT SHOULD I DO?

I worked at SEZL. What should I do?

If you were an employee of SEZL, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in SEZL, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any SEZL investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.