Loop Industries plummets 39% after a short-seller report claims its plastic-recycling technology doesn’t work

• The identical short-seller that focused Nikola in September has set his sights on a brand new identify: Loop Industries.
• In a report launched on Tuesday, Hindenburg Analysis alleged that Loop Industries’ know-how for recycling plastics did not work, describing it as “smoke and mirrors.”
• Shares of Loop Industries fell as a lot as 39% on Tuesday.
• Visit Business Insider’s homepage for more stories.

The identical short-seller that targeted Nikola in September is now alleging that one other firm “is smoke and mirrors” and is inflating its technological capabilities.

In a report released on Tuesday, Hindenburg Analysis alleged that Loop Industries was peddling plastic-recycling know-how that did not work.

Traders have taken notice of what Hindenburg has to say since its September report on Nikola led to a drawdown of practically 50% in that inventory.

Loop Industries says it makes use of proprietary know-how that may break down so-called PET plastics into base constructing blocks that may then be recycled.

Learn extra: Goldman Sachs says buy these 35 stocks for big gains right now as they offer double-digit sales growth and explosive margin expansion

Hindenburg stated that “in different phrases, the corporate claims to have found easy methods to flip nugatory trash into pure gold, a feat that multi-billion chemical corporations akin to DuPont, Dow Chemical, and 3M have been unable to attain on a big scale regardless of years of efforts.”

Hindenburg stated that Loop Industries had by no means generated any income and that nothing had materialized from its introduced partnerships.

The agency stated that it did not count on Loop Industries to “generate any significant income” and that it noticed 100% draw back potential within the inventory.

Learn extra: A fund manager beating 90% of his rivals told us why he actively avoids companies with giant profit margins — and shares 5 stocks he thinks will keep winning for years

“With a market cap of ~$515 million, we see 100% draw back to Loop as soon as it burns by its ~$48 million in steadiness sheet money,” Hindenburg stated.

Shares of Loop Industries have been down as a lot as 39% on Tuesday. Hindenburg disclosed that it was brief shares of Loop Industries.

Hindenburg stated its analysis was based mostly on interviews with former workers, rivals, business consultants, and firm companions. The agency stated it additionally reviewed firm paperwork and litigation data.

Loop Industries did not instantly reply to Enterprise Insider’s emailed request for remark.

Learn extra: MORGAN STANLEY: Buy these 44 cheap stocks poised to surge as the economy continues to recover and reopening expands