Sezzle Sizzles with 39% Rally but CE 100 Index Barely Budges

The CE 100 Index gained 1.2% last week as investors got excited — again — about AI, and the possibility of sustained profits for in the buy now, pay later space. 

The Communications pillar gained 3%, followed by the Pay and be Paid segment, up 2.8%. Snap surged 8.2% to lead communications names higher. As reported here, Snap has launched a program that helps businesses engage with customers via augmented reality (AR).

The new AR Enterprise Services enables businesses to integrate Snap’s AR technology into their own apps, websites and physical locations, per a company release.

Within the Pay and be Paid pillar, Sezzle gained 39%, as the company said that income for February increased 29.1% year over year to $10.7 million. Total Income as a percentage of Underlying Merchant Sales (UMS) was 9%. The rally also comes on the heels of news that Sezzle intends to list shares of common stock on the Nasdaq Global Market.

The latest monthly metrics continue a streak of profitability, where Sezzle said in its latest earnings release at the end of last month that net income jumped 16.2% to a record $38.3 million in the fourth quarter of 2022.

AI Gets a Boost, Too

C3.ai gained 16.9%, joining a rally in artificial intelligence (AI) stocks that was sparked this week when Microsoft founder Bill Gates wrote in a blog post that “Superintelligent AIs are in our future, stating that “the development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet and the mobile phone. It will change the way people work, learn, travel, get health care and communicate with each other. Entire industries will reorient around it.”

Among declining issues, Pinduoduo was 19.6% lower, as parent company PDD reported fourth-quarter results that missed expectations. The company’s results show that merchandise sales fell 29%. Also, this past week, as Bloomberg reported, Google suspended the Pinduoduo app, banning it from the Play store, after discovering malware in certain software versions. Pinduoduo, for its part, said in a statement relayed by CNN that it rejects “the speculation and accusation that Pinduoduo app is malicious just from a generic and non-conclusive response from Google.”

Block in Short Seller’s Crosshairs

Block, formerly Square, gave up 18%. A short seller, Hindenburg Research, citing what it said has been a two-year investigation, alleged the payments company inflated the user base of its Cash App money transfer platform and allowed criminal activity to occur there. 

Per the allegations in the report, former Block employees have allegedly estimated that between 40% to 75% of the accounts they reviewed were fake or tied to fraud, or multiple accounts were connected to a single person.   

Block issued a statement Thursday saying it would explore legal action against Hindenburg, calling the report “factually inaccurate and misleading,” adding that “we have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors,” Block said. “We are a highly regulated public company with regular disclosures and are confident in our products, reporting, compliance programs and controls.”

WeWork slid 17.9%. The company said earlier in the month that it had reached a deal to recapitalize, cutting its debt load below $2.4 billion, where that level had been more than $3.6 billion, as Barron’s noted. $1 billion of debt held by SoftBank is being converted to equity.