Shares of EVgo (NASDAQ:EVGO) stock are plunging by over 13% today on the release of a short report from Fuzzy Panda Research. The firm accuses the electric vehicle (EV) charging company of operating faulty chargers and having a relationship with disgraced financier Jeffrey Epstein.
Before debuting as a special purpose acquisition company (SPAC) for $2.6 billion, LS Power bought EVgo for an estimated $134 million in 2020. After the acquisition, revenue fell by 17% and utilization fell by 45%, both due to the effects of the pandemic.
Today, LS Power is still the company’s largest shareholder, with an estimated cost basis of 70 cents per share and a 74% stake. Despite the decline in performance, EVgo has paid LS Power over $14 million in bonuses and fees. The initial public offering (IPO) of EVGO stock also netted LS Power a greater than 1,500% return.
EVgo claims to operate more than 850 fast-charging stations in over 30 states. The company also boasts a “98% network uptime” and says upwards of 130 million people in the U.S. live within 10 miles of an EVgo fast charger. However, Fuzzy Panda cites a study showing that more than 25% of these chargers are broken or out of service.
Let’s get into the details.
EVGO Stock: Fuzzy Panda Releases Short Report
Fuzzy Panda says EVgo is overstating how many operational chargers it has, but that’s not its only accusation. The firm also alleges that Luminus Management — LS Power’s “affiliate fund” — has connections to Jeffrey Epstein. Fuzzy Panda characterizes Luminus President Jonathan Barrett as “Epstein’s protégé.”
A New York Times article shows that Jonathan Barrett and his brother, Anthony, helped manage Epstein’s real estate portfolio, Ossa Properties. Additionally, a resumé of Jonathan’s shows a previous stint at J. Epstein & Co. Both brothers were also mentioned in Epstein’s “little black book.”
On July 2, the EVGO IPO lockup expires. That means LS and EVgo founders will be able to sell their shares. Fuzzy Panda estimates that 201.5 million shares will be eligible for sale, or 76.2% of all shares outstanding.
Fuzzy Panda concludes its report by saying the company has misled investors by claiming increased utilization when it actually declined. Furthermore, the company allegedly misled government officials by lying about its down-time. Finally, the short firm also believes that the low amount of capital spent on research and development (R&D) means EVgo lacks any competitive advantage.
On the date of publication, Eddie Pan did not hold (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.