- Stock down nearly 10% on pre-report $142 price
- Citron Research claims Etsy one of world’s ‘largest counterfeiting platforms’
- Cybersecurity firm Darktrace recently a short selling attack target
Arts and crafts consumer platform Etsy (ETSY:NASDAQ) has come under a short selling attack, accused of flogging hooky goods on a scale that would make Del Boy and Rodders blush.
Shares in Brooklyn-based Etsy slumped more than 8% after the release of a report by Citron Research that alleged that the company is ‘one of the largest counterfeiting platforms in the world.’
Citron, run by Andrew Left, starts the report by stating Etsy has ‘hit a new low’ as a public company and that its management has ‘knowingly or, at the very least, negligently, turned this company into the largest organised clearing house for counterfeit goods in the world.’
‘WALKING ON EGGSHELLS’ WITH LAWMAKERS
Citron claims that Etsy doesn’t just allow the behaviour but encourages it and promotes it by selling placement and status to the millions of sites that regularly violate copyright laws.
‘Citron believes Etsy is walking on eggshells with the FTC, DOJ, SEC, Customs and Border Protection, and the multitude of brands whose trademarks are being stolen and exploited daily,’ the investment research firm said.
Citron has previously targeted GameStop (GME:NYSE) in a shorting attack, where it hopes to profit from falls in target share prices. Citron was one of several short sellers that triggered the ‘meme’ stock craze two years ago.
BIG SHORTS IN THE PAST
While not always right, short sellers have helped to sniff out significant corporate wrongdoing over the years, most famously predicting the accounting fraud at Enron before it collapsed in 2001 and sounding alarms about subprime mortgages that sparked the 2008 global financial crisis.
UK cybersecurity firm Darktrace (DARK) recently came under attack from New York-based short seller Quintessential Capital Management. In recent years, Burford Capital (BUR:AIM) and Home REIT (HOME) have suffered allegation onslaughts from short sellers Muddy Waters and Viceroy Research respectively.
Etsy, which has yet to respond to the allegations, is set to open at $128.90 later today, down nearly 10% since the Citron report emerged.
