What happened
Shares of Triterras (TRIT +0.00%) fell 33.8% in January according to data from S&P Global Market Intelligence. The blockchain-based finance services company's stock fell following the publication of a short report on the company and a downgrade from an analyst.
While short squeezes powered huge gains for stocks including GameStop and AMC Entertainment Holdings, short pressure and negative coverage from analysts continued to weigh on Triterras stock in January. The fintech company faced scrutiny amid allegations about irregularities on its trading platform and failures to disclose important business info to investors, and shareholders moved out of the stock last month.
Image source: Getty Images.
So what
Triterras operates Kratos, a commodities trading platform that runs on the Ethereum blockchain. Phase2 Partners published a short report on Triterras on Jan. 15 stating that there were problems with the company's marketplace and that at least 75% of transactions conducted on its platforms have connections to company executives.
Triterras' continued reliance on business from Rhodium, a commodities trading business that has fallen on hard times and may have huge debt liabilities, has raised concerns among some investors. A lawsuit filed by Bernstein Liebhard in a New York district court suggested that recent disclosure filings from Triterras indicated that the company had failed to explain the extent to which growth was dependent on Rhodium.
The stock was likely pressured by a bevy of other class action shareholder lawsuit announcements related to corporate disclosures last month. Triterras went public after being acquired by Netfin, a special purpose acquisition company (SPAC), in November. The company's share price has lost roughly 40% of its value since market close on the day of the merger.
Now what
Triterras stock has continued to gain ground early in February's trading. The company's share price is up roughly 7% in the month so far.
Triterras has a market capitalization of roughly $610 million and trades at approximately 24.7 times this year's expected sales. Kratos and other blockchain-based trading platforms from the company could have big room for growth, but investors should approach the stock with the understanding that the business is currently wrapped up in some controversy and its outlook remains speculative.
