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A short-seller report sent the stock reeling.
Shares of Nuvei Corporation (NVEI +0.00%), a payment-processing company, were crumbling today after Spruce Point Capital Management, a short-seller, released a negative report about Nuvei. The tech stock had plummeted 39% as of 3:20 p.m. ET.
Spruce Point wrote a long list of alleged problems with Nuvei, including:
Image source: Getty Images.
One of the more eye-popping allegations in the press release said that, "Multiple Nuvei acquisition targets have been purchased from controversial figures tied to Ponzi schemes and fraudulent activity."
Spruce Point also said that Nuvei has failed to provide quarterly updates about merchant additions, whether its merchant enterprises are large or small, where sales are occurring geographically, and other details about its sales. Spruce Point said that it estimates up to 40% to 60% long-term downside risk for Nuvei's stock based on its assessment.
It's not unusual for short-sellers to release negative reports about companies. Investors will have to decipher whether or not the allegations are reason enough to sell their shares.
Some companies that are the target of these reports end up publishing a response to the allegations to defend themselves and ease investor concerns. As of this writing, Nuvei had not published a response.
Investors may want to be cautious with Nuvei's stock right now. It's likely to continue experiencing a lot of volatility based on the report.
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