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Sezzle's share price rises on planned Nasdaq listing

Australian fintech company Sezzle has seen its share price rise on plans to provide access to US investors with a listing on the Nasdaq Stock Exchange.

Source: Bloomberg

The share price of ASX-listed buy-now-pay-later (BNPL) company Sezzle has received a boost from its plans to provide equity access to US investors via a stateside listing on the Nasdaq exchange.

Sezzle announces Nasdaq listing ambitions

According to an announcement made by Sezzle on 13 March, the company plans to list common stock for trading on the Nasdaq Global Market using Chess Depositary Interests (CDIs). Following the listing, Sezzle's common stock will continue to trade on the Australian Securities Exchange (ASX).

Charlie Youakim, Sezzle's Chairman and CEO, said that the chief purpose of the listing is to tap a greater range of investors, as opposed to raising capital.

'A listing on the Nasdaq is a natural evolution for Sezzle given the Company is already filing the necessary reports with the SEC,' Youakim said.

'Although we are not seeking to raise capital as part of the Nasdaq listing, we are excited to expand the universe of potential investors to the United States.'

Prior to the listing, Sezzle said it would remove the Foreign Ownership Restricted (FOR) United States (US) person prohibited tag from the CDIs, which prevents them from being sold on the ASX to US persons unless an exemption is made.

Nasdaq listing will necessitate reverse share split

Listing on the Nasdaq Global Market will require Sezzle to perform a reverse split of its common stock, to satisfy the minimum US$4.00 bid price as required by Nasdaq's initial listing requirements.

Sezzle said that if its listing plans are approved by shareholders, it will effectuate the reverse split before its stocks make their debut on the Nasdaq Global Market so that the bid price of the CDIs satisfies this requirement.

Sezzle's share price leapt around 10% on the morning of the announcement to around 58.5 cents. Its share price has since slipped back to around 56 cents, yet has still risen by over 35% since the start of 2023.

Strong Q4 performance drive share price gains

A key driver of Sezzle's share price gains since the start of 2023 has been solid profitability in the final quarter of 2022.

According to Sezzle's December business update, strong revenue growth helped the company to achieve its second straight month of profitability, as well as bring the final quarter of 2022 into profitable territory.

In December Sezzle's revenues rose 15.7% compared to the same period in 2021 to hit $19.9 million. This figure also marked an increase of 1.7% compared to the previous month.

Both November and December were profitable months for Sezzle, enabling it to finish the year with a profitable quarter after sustaining heavy losses throughout most of 2022.

Sezzle's strong results in December and the upbeat outlook of management nonetheless arrive during a difficult period for the Australian BNPL sector, whose key players saw share prices wither in 2022.

Pressures on BNPL platforms could be further compounded in 2023 by calls for tighter regulation of the market. Towards the end of November, the Australian Treasury released an options paper outlining a trio of regulatory options for the BNPL sector.

The strictest of these options involves applying to BNPL platforms the same responsible lending requirements that are currently in force for credit card providers, and has received the strongest support from consumer groups and community legal centres.

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