By Ketki Saxena
Investing.com. -- Shares of Nuvei (TSX:NVEI) Corp., a Montreal-based company that provides payment services for various industries including gaming and crypto, experienced some volatility on Tuesday after Spruce Point Capital Management published a short report against the company.
The short seller, which had targeted Nuvei before in 2019, said that it is once again shorting the company with allegations regarding a lack of financial transparency, connections with failed crypto platform FTX and the recent acquisition of Paya Holdings Inc., an Atlanta-based payments provider.
Spruce Point argued that its analysis showed Paya was losing market share and revenue growth was slowing down.
Ben Axler, founder and chief investment officer at Spruce Point, expressed concerns about the underlying business performance of Nuvei: “We believe Nuvei’s underlying business is under pressure for a number of reasons,” he said in an interview to BNN Bloomberg.
Spruce Point estimated the stock's value could drop between 35% to 50%.
However, not all investors were swayed by Spruce Point's arguments.
On Monday night, Hollywood actor and entrepreneur Ryan Reynolds announced his investment in Nuvei without disclosing any financial details or terms. He also made several online videos promoting the company's brand as part of what he called "an official partnership". While some observers questioned whether Reynolds received restricted stock instead of cash compensation for his work, or if there was any connection between him and previous management issues raised by Spruce Point (such as alleged undisclosed related-party transactions), others saw his endorsement as a positive sign.
A spokesperson for Nuvei declined to comment on either the issues raised by Spruce Point or Reynolds' involvement with the company.