By Sam Boughedda
Investing.com — Mp Materials Corp (NYSE:MP) shares fell more than 13% on Tuesday after short seller Grizzly Research said it sees a potential 60% downside in the stock.
MP Materials became a public company back in November 2020 through a reverse SPAC merger.
Grizzly described the stock as a "low-quality deal that will cost investors dearly." In addition, Grizzly claimed in the report that the company can be traced back to the Chinese government despite the company selling itself as "the largest rare earth producer in the western world."
MP Materials responded Tuesday afternoon in a series of tweets. "Grizzly’s “report” gets the facts & analysis wrong and displays a fundamental misunderstanding of our business, industry & performance," said the first tweet.
"We take great pride in communicating clearly & transparently with stakeholders through our public filings & communications. It’s disappointing to see entities misrepresent and sensationalize aspects of our business," MP said in another tweet.
Grizzly said, "We found that Shenghe, a related party that accounts for 99% of $MP revenue, and a significant shareholder, can be traced back to the Chinese central government. This has been overlooked so far and could potentially pose a national security concern," tweeted Grizzly.
"The idea that $MP is the only feasible competitor to Chinese producers seems like a complete charade given that its biggest client and significant shareholder is controlled by the Chinese Treasury Department," Grizzly later added.
Before the short report, JPMorgan analyst Tyler Langton said he sees "positive tailwinds" for MP Materials ahead of its Q3 earnings report on November 4.
The analyst said he expects solid earnings with no surprises and kept an overweight rating on the shares with a $45 price target.