On December 16, Muddy Waters released a short selling report on shells. "We shorted Shell because we concluded that the company was suspected of systemic fraud, inflated its total transaction value (GTV) for new home sales by approximately 126% or more, and increased its commission income by approximately 77-96%, the report said. We found that the volume of transactions, the number of stores and the number of agents reported by Shell to investors were very different from the transaction data we had in our months of data collection procedures from the Shell platform. Through key due diligence at Shell stores, including field interviews and on-site visits, we conducted spot checks on the findings and confirmed these discrepancies."
Muddy Water also said Shell's frequently repeated mantra on the company's earnings call was "do the right thing, even if it's difficult." This is not the case. In short, we found massive fraud, including a fake acquisition that appeared to be designed to mask fraudulent revenue. Our field research uncovered ghost stores, cloned stores, and secret programs to increase revenue by round-trip cash through affiliated brokerage firms. Like Luckin Coffee, this is a real business with a lot of fraud.
Shell U.S. stocks plunged short-term before the market, once falling more than 10%, as of press time, the decline narrowed to 4%.
Edit/lydia
Risk Warning: The views of the authors or guests shown above have their own specific positions, and investment decisions need to be based on independent thinking. Futu Holdings will endeavour, but cannot guarantee, the accuracy and reliability of the above contents and will not be liable for any loss or damage arising from any inaccuracies or omissions.