Athenahealth, Inc (NASDAQ:ATHN) is suffering massively from the words of one hedge fund manager. David Einhorn told the Ira Sohn Investment Conference in New York on Monday evening that he was shorting the stock and thought that the market was caught up in another tech bubble. The healthcare company’s stock was down by more than 12% on this morning’s market as a result of the comments.

David Einhorn AthenaHealth

According to David Einhorn the firm’s recent gratuitous rise in value was likely unwarranted and the firm could lose 80% of its value as the current valuation problems drift away. The athenahealth, Inc (NASDAQ:ATHN) short speech comes just a few weeks after Mr. Einhorn warned of a wide tech bubble, and said that he was shorting more than one of the companies that he felt were overvalued.

Athenahealth routed on Einhorn comments

Athenahealth, Inc (NASDAQ:ATHN) is already going through a pretty rough 2014 without comments from David Einhorn. The company’s stock rose at an absurd pace at the beginning of February to hit an all time high of $195. The stock quickly began to recede, and it closed on Monday at $126.78. That was before Einhorn’s comments took hold of the investor mood.

Einhorn was pretty damning of the company’s business, and of its CEO Jonathon Bush. He told the investment conference, “There will always be high-risk, low-margin things to do that will make healthcare better. Shareholders might want to consider the ramifications of the misallocation of capital.” He also poked fun at several comments from Mr. Bush, cousin of President George W. Bush, and his use of buzz words.

Athenahealth, Inc (NASDAQ:ATHN) is a provider of electronic healthcare records. The business has been watched closely, and many investors clearly judged it a solid bet. With no profits to show to investors, and momentous changes likely arriving in the healthcare business in the years ahead, Mr. Einhorn appeals to have hit a business that investors already though might be overvalued, and one that may have a lot to lose in the coming months.

Is tech bubble 2.0 on the way?

“The thing about bubble stocks is the best reason to own them is because they are going up,” Mr. Einhorn told the gathered audience at the Ira Sohn conference. He’s certainly right about the nature of those markets, but his assertions that there is another tech bubble happening right now might be more controversial.

The last tech bubble saw an incredible amount of retail investors jump into a market their broker told them was only going up. The technology of the future cannot lose out, according to the reigning luminaries. The technology lost nothing, but the businesses collapsed. A number of companies that had very little in tech apart from the trappings of a tech firm, disappeared forever.

The momentum problems of the opening months of 2014 gave a lot of investors pause for thought and brought a correction to some of the most highly valued stocks around. With athenahealth, Inc (NASDAQ:ATHN) in freefall on the back of an Einhorn-promised bubble, investors will be keen to see what else the investor is going after, and whether there is any truth in his projections.