Own Sezzle shares? Here’s why the BNPL company is suing GameStop

A man in his 30s holds his computer underneath and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.A man in his 30s holds his computer underneath and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.

Sezzle Inc (ASX: SZL) shares are enjoying a strong run today, up 9.3% to 24 cents.

This will surely be welcome news to battered Sezzle shareholders.

The ASX buy now, pay later (BNPL) company has been under heavy selling pressure since mid-2021. And the scrapping of its merger with Zip Co Ltd (ASX: ZIP) last week Tuesday saw Sezzle shares tumble another 38% on the day.

In the latest news, Sezzle is suing United States-based GameStop Corp (NYSE: GME) for an alleged breach of contract.

Why is GameStop being sued?

Sezzle stated that it’s suing GameStop for the company’s failure to maintain links to its BNPL services throughout its website.

Sezzle said it had a two-year merchant agreement with GameStop as of November 2020 for use of its payments platform. The company alleges that GameStop violated this agreement when it removed Sezzle’s “functionality from its cart page and product detail pages without notifying Sezzle in direct breach of the contract”.

According to Sezzle, when GameStop was approached about the breach of contract, it terminated Sezzle without notice and now is no longer paying its invoices.

GameStop did reportedly admit that it had removed Sezzle’s widget and that currently Sezzle is not used on its website.

Sezzle said it is now asking for $1.4 million in damages and related service fees that GameStop has failed to pay. The BNPL share is also looking to recoup marketing expenses it spent on GameStop’s behalf.

How have Sezzle shares been tracking?

Despite the big leap higher today, Sezzle shares remain well down over the medium term.

Year-to-date, the Sezzle share price is down 92%, which compares to a 12% loss posted by the All Ordinaries Index (ASX: XAO) so far in 2022.

Over the past 12 months the picture is even gloomier, with Sezzle having tanked a painful 97%.

The post Own Sezzle shares? Here’s why the BNPL company is suing GameStop appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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