Enphase Energy (ENPH) has declined a whopping 18% today. The reason for this is because of alleged fraud.
Enphase Energy (NASDAQ:ENPH) director Benjamin John Kortlang discloses the sale of 180K common shares on June 15 at $50.2314. In another transaction, director Joseph Ian Malchow sold 6250 common shares at $50.51.
Just a couple hours before opening, a short seller Prescience Point Capital has alleged that the revenue is fabricated. According to their negative report, it states that 39%, or $205M, of the company’s reported U.S. revenue is “fabricated” by “accounting gimmicks that artificially inflate revenue and profits.
Prescience Point has been closely scrutinizing Enphase for over two years and we believe the company’s financial performance has become increasingly disconnected from reality since our initial reports were published in July 2018 and August 2018. Following our latest investigation, which included interviews of numerous former employees, we believe that Enphase’s financial reports are not reliable, and that the 4,653% increase in its share price since CEO Badri Kothandaraman was promoted to CEO is unwarranted.
“The explosive growth that Enphase has reported to investors over the last two years is nothing but a sham which has lined the pockets of those at the top of the company,” said Eiad Asbahi, Founder and Portfolio Manager of Prescience Point. “We believe the evidence presented in our report will result in multiple government investigations, a major accounting restatement, shareholder lawsuits and a delisting of ENPH shares from the NASDAQ.”
Our research suggests that at least 39%, or $205 million, of US revenue reported by the company is potentially fabricated, as is a significant portion of the company’s international revenue. Multiple former employees in India independently told our private investigators that Enphase was fabricating figures it reports publicly, and that the company is using overseas operations to help executives perpetrate potential accounting violations.
Our research also suggests that Enphase executives and board members, as well as its previous largest shareholder, likely learned of the existence of our private investigation. This is supported by the unprecedented number of shares these parties sold from late-May to mid-June, which is right around the time that our private investigation had wrapped up. Their timing and shear magnitude of sales appears to be a rush for the exits ahead of Enphase’s coming downfall.
Investigation launched against Enphase Energy (ENPH)
Block & Leviton LLP Announces Investigation of Enphase Energy, Inc. for Possible Securities Laws Violations.
