PureCycle (NASDAQ:PCT) stock is taking a beating on Thursday following a brutal short report taking the plastics recycling to task.
Let’s take a dive into that repot below and why it’s hammering PCT stock so hard today.
- To start off with, the short report comes from Hindenburg Research.
- In the report, it claims that PureCycle is another case of a special purpose acquisition company (SPAC) gone wrong.
- It points to the company’s lack of revenue, yet multi-million-dollar bonuses for executives.
- In addition to this, Hindenburg Research reached out to previous employees of other companies taken public by the same team.
- These employees said that financial projections are “wild ass guessing”, and that companies were brought public to early and deceived investors.
- Backing up this idea is the fact that PureCycle’s chairman and CEO has taken six companies public prior to this one.
- None were successful with two going bankrupt, three delistings, and one being acquired after 95% drop.
- The short report also highlights that the company only has two ratings, both of which are buy.
- The problem is that these ratings come from Roth Capital and Craig Hallum Capital.
- Both of these investment banks helped bring the company public and received 2 million founder shares for less than a penny each.
- Since PureCycle went public via a SPAC and not an IPO, there’s no quiet time that requires these investment banks to not rate PCT stock.
- It’s also worth noting that PureCycle hasn’t published any peer-reviewed studies detailing its advancements in the plastics recycling field.
- That’s important as other companies in the field do typically do this.
- Adding to that are claims that the company’s flammable pressurized process was called a “bomb” by Hindenburg Research’s expert on the matter.
PCT stock was down 30.8% as of Thursday morning.
PureCycle isn’t the only SPAC making headlines lately.
Several others are in the news as well. That includes Social Capital Hedosophia Holdings Corp. (NYSE:IPOE), Stem Inc. (NYSE:STEM), and Social Capital Hedosophia Holdings VI (NYSE:IPOF). Investors can learn more about these at the links below.
More SPAC News
- Social Capital Hedosophia’s Merger With SoFi Is a SPAC Star
- Star Peak Energy Illustrates the Woes SPACs Face
- IPOF Stock: What to Know About the New Equinox SPAC Merger Rumors
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.