Shares of Globant are moving lower after short-selling research firm Spruce Point Capital Management put a “Strong Sell” opinion on the name. Spruce Point believes Globant’s organic growth rate “has in fact been decelerating, and is now below target.” Further, the firm claims to have found evidence suggesting that management is “growing dependent on accounting and financial presentation gimmicks to embellish a business that has generated negative cumulative free cash flow since coming public.” In addition, recent news that WPP’s (WPP) CEO Martin Sorrell is under investigation for possible misuse of assets and allegations of improper behavior are a potential overhang for Globant, Spruce Point wrote in a report posted on its website. The firm notes WPP is the company’s largest shareholder and that Sorrell is a member of its Board of Advisors. Spruce Point has a long-term price target of approximately $24.50 to $29.50 for Globant shares, which represents 40%-50% downside risk. The stock in late morning trading is down 3.7%, or $1.81, to $47.02. Globant describes itself as a “digitally native technology services company.”
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