Scorpion Capital, an activist short seller, is calling out Berkely Lights (NASDAQ:BLI) stock as a fraud in a new report.
Scorpion Capital released a nearly 160-page report covering its stance on Berkely Lights. It also summed up that report in a Twitter (NYSE:TWTR) thread today. In that thread, it calls the company “Just Another VC Pump At 27X Sales.”
So why has Scorpion Capital taken such a strong position on BLI stock? It comes down to a few factors that traders will want to take note of.
First off, Scorpion Capital says that BLI stock stands out even in an era of fraudulent “black box” IPOs. It mentions the company’s own descriptions for itself, which it says are “nonsensical phrases, newly-invented words, and drivel.”
Other red flags pointed out by Scorpion Capital include growth for Berkely Lights stalling, as well as its CFO and Chief Accounting Officer jumping ship. It also points to accounts spiking despite sales flattening.
Scorpion Capital also focuses on Berkely Lights selling point as a player in the synthetic biology space. It calls this a “meaningless term that’s a synonym for publicly traded scam.” It points to other companies in the field, such as Zymergen (NASDAQ:ZY), which saw a massive fall in price last month.
The news surrounding BLI stock today has it trading more shares than normal. As of this writing, some 2 million shares were on the move. For comparison, the stock’s daily average trading volume is closer to 870,000 shares.
BLI stock was down 11.8% as of Wednesday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.