Conglomerate Ebix Inc stock plunged 41.11% after a short-seller, Hindenburg Research, questioned the company’s accounting in a newly published report.
- Hindenburg stated that some of the figures the company has presented relating to its Indian unit EbixCash, which it is set to take public in a $4.5 billion arrangement, do not add up.
- The unit has a prepaid gift card unit, which accounted for almost 82% of its 2021 revenue.
- In February 2021, its auditor, RSM resigned since Ebix would not provide evidence of unusual transactions related to the Company’s gift card business in India.
- RSM stated that they were unable, despite repeated inquiries, to get sufficient appropriate audit evidence to allow them to evaluate the business purpose of huge unusual transactions.
The short-seller discovered that the gift card business has only two customers, neither of which appears to have a functional business.
EBIX down -41.11, SPX down-3.01%
Source: MarketWatch
