Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Nuvei Stock Plunges On 'Strong Sell' Rating From Spruce Point Capital

Published 12/08/2021, 01:26 PM
Updated 12/08/2021, 01:27 PM

By Sam Boughedda

Investing.com — Shares of Montreal-based electronic payments company Nuvei Corp (NASDAQ:NVEI) plunged 37% after Spruce Point Capital Management — an activist investment fund manager — issued a strong sell rating on the stock.

The short-seller outlined several reasons for the move, including fraud allegations from customers. It issued a report titled "fool me once, twice, but not three times," stating it sees a 40% to 60% long-term downside risk.  

A Nuvei representative wasn't immediately available for comment.

The hedge fund said in a report: "After conducting a forensic financial and accounting review, Spruce Point believes shares of Nuvei Corp. (TSX and Nasdaq: NVEI), a highly promoted payments processing technology company, has covered up a pattern of business failures, lack of organic growth, and a web of relationships with individuals connected to major Ponzi Schemes and alleged fraudulent activities."

They added: "Buyer beware: Nuvei's financial disclosures are weak and we believe results are being temporarily enhanced from concentrated exposure to high risk gaming and eCommerce."

Other claims included declining North American organic growth. 

Since the release, Nuvei's shares fell to a low of $43.10.

However, Citron Research, which is no longer a short seller, said Nuvei shares were oversold, and it is buying the stock. In addition, Citron said there was "no proof of fraud."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.