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.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

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

STACKED COINS DEPICTING MONEY GROWTH
Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Tech Stocks

TFSA Investors: 3 TSX Stocks You’ll Regret Not Buying on the Dip

Among wide range of investments allowed in a TFSA, now is the time to invest in stocks.

Read more »

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background
Tech Stocks

2 Stocks That Lost Over 50% in 2022

The recovery of the TSX’s tech superstar and a promising high-growth stock that lost more than 50% in 2022 is…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Why BlackBerry Stock Looks Way Too Undervalued After Q1 Earnings

BB stock hasn’t seen any appreciation lately, despite its continued progress on the IVY platform and early signs of the…

Read more »

A stock price graph showing declines
Tech Stocks

BlackBerry Q1 Earnings: The Declining Revenue Streak Continues!

Will BB stock break below $6?

Read more »

A bull outlined against a field
Tech Stocks

After the Recent Fall, it’s Time to Turn Bullish on 2 TSX Growth Stocks

With the kind of lows these TSX stocks have seen, the negatives appear to be priced in.

Read more »

man sitting in front of 3 screens programming
Tech Stocks

3 Ultra-Cheap Tech Stocks to Consider Buying

Three ultra-cheap tech stocks are interesting picks for their favourable business outlooks and long growth runways.

Read more »