Vivint Solar drops after short-seller Aurelius Value issues cautious report

Shares of Vivint Solar (VSLAR) plunged following a report from short-seller Aurelius Value. NEW REPORT: In a new report published on its website, Aurelius Value says Vivint "appears to have largely concealed a growing pattern of undisclosed lawsuits" claiming the company has engaged in a nationwide fraud involving forged customer contracts. According to the short-seller, the 28 undisclosed lawsuits allege that the company has forged the signatures of homeowners, complete strangers, relatives, neighbors, and even a dead person onto fake solar contracts and that court documents suggest Vivint's corp(orate offices has spreadsheets keeping track via an internal system of the fraud allegations. The lawsuits claim that "as a pattern and practice, (Vivint) regularly forges signatures" on customer contracts in states including California, which accounts for about 34% of its business. Additionally, the suits allege that "It is a corporate policy and culture at Vivint Solar to look the other way and dismiss these numerous complaints and to overtly or tacitly encourage their sales agents to hide important sales details from consumers, forge and falsify authorization documents... Vivint promotes its employees for this conduct." According to a lawsuit filed by Southern California Edison, Vivint has gone "so far as to use counterfeit Edison logos and trademarks on their clothing" to dupe homeowners by impersonating Edison employees. VIVANT'S BUSINESS MODEL 'VULNERABLE' TO COLLAPSE: Aurelius contends that Vivint's business model appears "particularly vulnerable" to collapse and that in order to sustain itself, must constantly generate large amounts of new solar contracts each quarter. The firm sees a district risk that the pattern of undisclosed lawsuits and alleged misdeeds misdeeds have been deployed to mask weakness in the underlying business, especially considering that Vivint has missed revenue estimates in four of the last five quarters. PRICE ACTION: In morning trading, shares of Vivint Solar are down 6.7% to $6.25.

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