PureCycle Technologies Inc. (NASDAQ: PCT) shares were reported about 26% down in premarket trading on Thursday after Hindenburg Research called it a ‘charade’.
In its report, Hindenburg highlighted that PureCycle’s executives, including CEO Mike Otworth, listed six other companies on the stock exchange before PureCycle. Two of these ended up bankrupt, three were eventually delisted, and the last one posted a 95% decline after which it was acquired.
PureCycle’s financial projects might be overstated
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The report also warned that PureCycle Technologies’ financial projects might also be overstated. According to Hindenburg:
“PureCycle is the latest zero-revenue, ESG-themed SPAC taken public with a bold story about how it will someday revolutionise the plastics recycling industry.â€
The news comes more than a month after PureCycle completed its business combination with Roth CH Acquisition 1 (SPAC). As per Hindenburg’s report, PureCycle executives have so far received cash bonuses worth £5.04 million as the SPAC deal closed. They are also expected to collect another £28.80 million in compensation before the company generated a single dime in revenue.
Roth is notorious for its role in listing several Chinese companies on the U.S. stock exchanges. The majority of these companies later met with fraud allegations leading to an eventual collapse. Roth also rated these companies at ‘buy’ upon IPO to mislead public investors.
Hindenburg’s report went on to say:
“In our opinion, PureCycle represents the worst qualities of the SPAC boom; another quintessential example of how executives and SPAC sponsors enrich themselves while hoisting unproven technology and ridiculous financial projections onto the public markets, leaving retail investors to face the ultimate consequences.â€
PureCycle is yet to respond to the accusation
PureCycle is yet to make an official statement in response. According to Hindenburg’s expert, the Orlando-headquartered company is facing issues at a lab-scale and is yet not delaying plans of going commercial. PureCycle’s flammable pressurised process, the experts added, is a “bombâ€.
Last month, Spruce Point targeted another player of the plastics recycling industry, Danimer Scientific, with a short call. Since April 22nd when the report was published, Danimer has tanked 21% in the stock market.
PureCycle Technologies opened at £13.68 per share in the stock market on Thursday and is currently exchanging hands at £10.96. The Nasdaq-listed firm went public in March at a per-share price of £23.27. At the time of writing, PureCycle Technologies has a market capitalisation of £1.80 billion.
