Gotham City Research has admitted it could have got “some things wrong” about the stock it identified for a zero-dollar price target – but is standing by its estimate.
The shadowy short-seller firm, which has previously targeted the likes of Quindell and Gowex, issued a note on Tuesday claiming that Endurance International Group was over-estimating its growth and adding that 40-100 per cent of its profits were “suspect”.
EIGI's share price fell more than 26 per cent on Tuesday, though ended the day down just over 10 per cent. Yesterday it fell a further seven per cent.
The Nasdaq-listed firm yesterday rebutted Gotham City's various arguments, saying they were “baseless and not rooted in reality”.
Gotham City acknowledged it “get[s] some things wrong and some things right” but added that was “all we can do, particularly when companies like Endurance International Group provide either limited disclosure or disclosures that seem transparent and reliable, yet are precisely irrelevant”.
It added: “We may get some things wrong about Endurance, but we remain confident that shares will approach $0.00 per share, given the totality of our findings, both in the report–and to be released in the future.”
It also responded on a point-by-point basis to EIGI's rebuttal, insisting that its “reported metrics are transparently irrelevant, confusing and not consistent with industry-wide definitions”.
Gotham City also claims that EIGI “failed to answer [our] questions” when contacted by the firm.
The “baseless and not rooted in reality” claim is also dismissed as not applying to any of the specifics of Gotham City's report.
Read the follow up note here.