Sezzle, a prominent player in the Buy Now, Pay Later (BNPL) sector, has recently seen its shares decline sharply following a report from short-selling firm Hindenburg Research. The report accused Sezzle of engaging in risky lending practices, suggesting that the company is losing both customers and merchants at an alarming rate. Sezzle has refuted these claims, labeling them as misleading and out of context, while maintaining confidence in its financial outlook with an increased revenue forecast for FY 2024. Hindenburg's allegations point to a troubling trend of lower-quality loans driving Sezzle's earnings growth, alongside a significant drop in active merchants and customers. The report also suggests that Sezzle's customer enrollment practices may be inflating its user numbers. As the BNPL industry faces increased competition and a thinning landscape, the future of smaller providers like Sezzle appears uncertain, with industry experts predicting a continued shakeout in 2025.
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