Darktrace shares crashed to a record low today after a short seller alleged that accounting errors had been made by the British-American cybersecurity firm.
New York asset management firm Quintessential Capital Management (QCM) published a damning report today alleging dubious marketing, sales and accounting tactics were used to inflate the company’s value before it was publicly listed in 2021.
The New York firm said they are “deeply sceptical about the validity of Darktrace’s financial statements and fear that sales, margins and growth rates may be overstated and close to a sharp correction”.
“We would like to give our strongest possible warning to investors,” QCM added.
The 69-page document sent shares in Darktrace down 4.5 per cent today. This came on top of a further steeper drop yesterday when QCM first announced its short position.
Darktrace, which is listed on the London Stock Exchange, insisted it was fully confident in its practices and in the integrity of its independently audited financial statements.
“We have rigorous controls in place across our business to ensure we comply fully with IFRS accounting standards,” Darktrace said, adding that it had not been contacted by the authors of the report before it was published.
Darktrace shares have been stooping low all month since product trials were hindered due to consumer hesitancy amid a worsening economic climate, leading the company to slash its full-year revenue forecasts.
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