Why Nuvei’s Stock Price Crashed Over 50% Today

NVEI stock crashed by over 50% today after a New York-based short-seller severely criticized Nuvei’s management in its latest report.

| More on:
Businessman looking at a red arrow crashing through the floor

Image source: Getty Images.

What happened?

The shares of Nuvei (TSX:NVEI)(NASDAQ:NVEI) crashed on Wednesday. At the time of writing, it was trading with about 53% losses for the day at $57.45 per share, touching its lowest level in over a year. As a result of this massive selloff today, NVEI stock — which was up 58% on a year-to-date basis until yesterday — is now down by 26% in 2021.

So what?

Nuvei stock’s seemingly unpredictable massive losses today came after Spruce Point Capital — a New York-based short-seller — severely criticized the company in its latest report this morning. Here are some of the serious allegations that this short report on Nuvei stock highlighted on December 8 while terming the company as “a highly promoted payments processing technology company”:

  • Nuvei “has covered up a pattern of business failures.”
  • Its business lacks organic growth.
  • Spruce Point also claimed that NVEI has “a web of relationships with individuals connected to major Ponzi schemes.”
  • According to the short report, Nuvei’s business is declining organically in North America.
  • The report also raised questions about the educational credentials and career history of the company’s CEO Phil Fayer.

In its critical report on the Canadian payment services provider Nuvei, Spruce Point said that it sees a “40-60% downside risk” in its stock. This short report is one of the key reasons that hurt investors’ sentiments and drove today’s massive crash in NVEI stock.

Now what?

Nuvei has been one of the most attractive tech stocks on the TSX since it went public slightly more than a year ago. Interestingly, its initial public offering was the largest from the tech sector in the history of the Toronto Stock Exchange.

We must not forget that Spruce Point Capital is the same short-seller that hit out at the Canadian e-commerce company Lightspeed Commerce on September 29, 2021, in a similar fashion. Its short report on Lightspeed also made some serious allegations on its management. This report is the reason why LSPD stock has tanked by nearly 57% since then.

Given the ongoing extreme volatility and panic selling in Nuvei stock, I wouldn’t consider buying the dip in Nuvei stock at the moment. Instead, I’d wait and watch for Nuvei’s response to this short report.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of and recommends Nuvei Corporation. The Motley Fool recommends Lightspeed POS Inc. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Tech Stocks

work from home
Tech Stocks

Could Lightspeed Stock Be a Big Winner in 2023?

Investors can capitalize on Lightspeed’s low valuation and benefit from the recovery in its price.

Read more »

Tech Stocks

TFSA Passive Income: How I’m Investing to Make $2,000/Year From Dividends

I am increasing my dividend income by investing in dividend stocks like the Toronto-Dominion Bank.

Read more »

Electric car being charged
Tech Stocks

Is Now The Time to Buy EV Stocks?

EV stocks may be down now, but don't count them out. They'll soon be back up again, so now may…

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

Better Buy: Amazon vs. Apple Stock

While both Amazon and Apple have bright long-term prospects, Apple stock looks like the best tech company to invest in…

Read more »

A stock price graph showing declines
Tech Stocks

Has Blackberry Stock Finally Stopped the Slide?

Blackberry has not yet delivered the kind of financial results that we know it can, but this is about to…

Read more »

Car, EV, electric vehicle
Tech Stocks

Chinese Stocks are Soaring: This TSX Stock Could Gain

Magna International stock could benefit from China's economic re-opening.

Read more »

Money growing in soil , Business success concept.
Tech Stocks

1 Oversold Growth Stock to Buy for Major Returns in 2023

This growth stock could be the best Canadian stock to buy now for 2023, with shares possibly doubling back to…

Read more »

Hands holding trophy cup on sky background
Tech Stocks

Could BlackBerry Stock Be a Big Winner in 2023?

BlackBerry (TSX:BB) stock more than halved last year amid the tech stock selloff. Could 2023 be a winning year for…

Read more »