What happened

After a whopping 95% gain in July, shares of Blink Charging (BLNK 0.42%) powered down in August and fell 36%, according to data from S&P Global Market Intelligence. Although the company released its second-quarter earnings report, which featured a company record for quarterly revenue at $1.6 million, investors quickly lost interest in the company's apparent success.

While the stock had surged in the first half of the summer, two critical reports, which raised numerous concerns about the company, and an analyst's downgrade drove investors to leave their positions.

A Blink charging station in a parking lot.

Image source: Blink Charging.

So what

Announcing a short position in Blink's stock, Culper Research raised doubts in a critical report about the size of Blink's electric vehicle (EV) charging network, which consists of 15,151 charging stations, according to the company.

Based on its investigation, which Culper says included personal visits to the sites of the charging stations, the short-seller contends that Blink "has vastly exaggerated the size of its EV charging network in order to siphon money from the pockets of investors to insiders." Culper estimates that Blink has a public charging network of 2,192 stations. Arguably, the harshest criticism, however, comes in the personal attack against management. Culper asserts "Blink is a scheme designed by Chairman and CEO Michael D. Farkas to pillage minority investors to the benefit of insiders."

Culper wasn't alone in its scathing criticism of Blink last month. Mariner Research Group also released a harsh report, echoing many of the concerns Culper raised. Unlike Culper, however, Mariner went so far as to issue a price target on the stock of $1. For some context, Blink opened at $10.62 on the first day of trading in August and hit an intraday high of $11.57.

And it wasn't only the short-sellers that moved investors last month. Sameer Joshi, an analyst at H.C. Wainwright, also revealed a bearish outlook, downgrading the stock to neutral from buy as its valuation is significantly higher than his previously issued price target of $5, according to Thefly.com.

Now what

Responding to the critical reports from Culper and Mariner in a letter to shareholders posted on the company's website in late August, Farkas implored them to disregard the accusations, stating, "Now more than ever I must ask that you believe that these allegations are nothing more than baseless, slanderous and vicious allegations and support me in my leadership of this gem that we all share." The market seemed unimpressed with Blink's response to the short reports. Since the start of September, shares have tumbled 9%.

When evaluating critical reports such as those that Culper and Mariner issued, investors must remember that the short-sellers have a vested interest in seeing the stock fall. Nonetheless, Blink's weak response to the allegations has done little to restore investor confidence. For those interested in EVs or simply growth stocks in general, this story seems to be one to watch from a distance.