Spruce Point Doubles Down on Nuvei (NVEI) Stock Short Report


  • Spruce Point Capital Management has released its second short report on Nuvei (NVEI).
  • The short seller believes NVEI could decline by 35% to 50%.
  • NVEI stock is up by about 60% year to date.
NVEI stock - Spruce Point Doubles Down on Nuvei (NVEI) Stock Short Report

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Shares of Nuvei (NASDAQ:NVEI) are in the red after Spruce Point Capital Management released a second short report on the company. Spruce notes that shares of NVEI stock plunged by as much as 75% to $23.71 following the first short report, below the firm’s lowest price target of $37.72.

First, Spruce alleges that Nuvei has a close relationship with bankrupt cryptocurrency exchange FTX. Following the collapse of the exchange, Nuvei hired its global head of payments.

On Feb. 24, an article was published in Tech Times titled, “Nuvei’s New VP Adam Jacobs Has Links To The FTX Fraud.” Following publication, several websites linked the article in their own publications. However, many of these web links now show an error message. Spruce believes that Nuvei is the culprit behind this.

Yesterday, actor Ryan Reynolds disclosed a stake in the Canadian e-commerce and fintech company, which Spruce characterized as a “timely promotional endorsement.” However, the big question seems to be whether the invested money is Reynolds’ own capital or stock grants received from Nuvei itself.

Spruce Point Releases Second Short Report on NVEI Stock

Shares of NVEI are up by over 60% year to date, although Spruce believes that the party will soon be cut short. The firm has estimated between 35% and 50% downside for the company.

Spruce claims that a former Simplex Nuvei employee revealed that Nuvei owned equity ownership in FTX. On top of that, Nuvei is also a creditor in FTX’s bankruptcy filing. Based on this, the short seller alleges that Nuvei did not properly disclose its “full interest while announcing an FTX partnership that facilitated faster movement of funds into FTX.” Spruce also believes that Nuvei is delaying an impairment charge relating to Simplex, which it acquired for $290 million in September 2021.

Nuvei recently acquired Paya Holdings for $1.3 billion using leverage. However, the short seller predicts that this acquisition will turn out poorly. Before the company announced that it would go public, it boasted 1 million customers. This metric was later adjusted to just 100,000 customers. Based on internal research, Spruce estimates that the number of actual active volume-transacting customers was closer to 80,000.

“Furthermore, we believe Paya provided an overstated depiction of its organic revenue, net income and free cash flow by aggressively capitalizing and accounting for frequent and large customer list purchases,” said Spruce.

Spruce has reiterated its “strong sell” opinion on NVEI with a price target between $21.22 and $27.59.

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. 

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2023/04/spruce-point-doubles-down-on-nuvei-nvei-stock-short-report/.

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