Plus500 Ltd (PLUS) Slumps Further On Gotham Tweets

Shares of Plus500 plunged this week after the company announced that it was freezing some of its clients’ accounts to run checks on their information. The stock plummeted 45% on Tuesday after the announcement, marking its largest decline since the company’s 2013 initial public offering.

Shares continued falling today after Gotham City Research warned investors that shares of Plus500 Ltd (LON:PLUS) (OTCMKTS:PLSQF) could decline further.


Gotham City tweets about Plus500

Plus500 is a brokerage firm that offers online trading services to retail customers. The company is running the checks in order to ensure compliance with anti-money laundering rules in the U.K. The company said only its U.K. business is affected and that its divisions in Australia and Cyprus will continue to function as usual.

Gotham City Research has tweeted several times about Plus500 in the last 24 hours, warning that the company could face some serious backlash from freezing so many client accounts.

Additionally, researchers at Gotham reported that they are wary on Plus500’s “reported cash irregularities” and that investors should be too:

Hedge funds face off on Plus500

As is often the case when Gotham City (or any outspoken short-seller) makes a case against a company, hedge funds have begun taking sides in the battle. Giles Turner of The Wall Street Journal reports that some of the firms which have gone short on Plus500 include Valiant Capital Management, Sophos Capital Management, Coltrane Asset Management and Ennismore Fund Management.

The total short position amounted to just 2.58% of the float, which is only about £14 million, according to Turner. However, Partington reports that Markit showed that 6% of the shares were out on loan. The data indicated that approximately 75% of the shares that can be sold short are being borrowed.

On the long side is Odey Asset Management, which took this week’s massive pullback in share price as an opportunity to scoop up more shares. Regulatory filings indicate the firm raised its stake in Plus500 to 16% on Wednesday. Odey has only been building a significantly sized stake in the company over the last month or so. The firm’s position is now worth approximately £85 million.