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Why the Sezzle share price could surge higher on Friday

James Mickleboro
Payment Technology

The Sezzle Inc (ASX: SZL) share price will be one to watch on Friday following the release of a positive update this morning.

What did Sezzle announce?

Earlier this month the buy now pay later provider’s shares were sold off after it was dealt a blow by the California Department of Business Oversight (DBO).

The DBO alleged that Sezzle had engaged in “illegal unlicensed lending in the state” and advised of its intention to not approve the company’s application for a California Financing Law license to make loans.

This was very disappointing as the licence would allow the company to move away from its existing and convoluted model in the state. Furthermore, it would give rival Afterpay Ltd (ASX: APT) an advantage in this massive market. The payments giant was granted its license in the middle of November.

Pleasingly for Sezzle and its shareholders, the DBO has had a change of heart. According to today’s release, it has now formally approved Sezzle’s application for a lending license in the State of California.

This will allow Sezzle to continue operating seamlessly in the state, which management believes will solidify its position as the leading US-based instalment payment platform.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, said: “We are thankful to the California Department of Business Oversight for their prompt and open approach to resolving this matter in such a timely and professional manner. This is a great result for Sezzle and provides the platform for us to continue our planned growth strategy in the state of California.”

This development means Sezzle can now move from its retail instalment structure, which saw retailers initiate the instalment loan and transfer it to Sezzle to service, to a much simpler direct lending structure.

The post Why the Sezzle share price could surge higher on Friday appeared first on Motley Fool Australia.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020