(Reuters) – Shares of Applied Digital slumped on Thursday after Wolfpack Research disclosed a short position in the digital infrastructure company and accused it of “an embarrassing and predictable stock promotion.”
The stock was down 16.33% at $7.51 at midday, after a nearly four-fold jump so far this year.
Wolfpack said Applied Digital “pumped up its stock in May by claiming to pivot from a floundering business hosting bitcoin miners, to becoming a low-cost AI cloud service provider.”
Reuters could not independently confirm the claim.
The short-seller also took aim at investment bank B Riley Financial, which it had targeted earlier this year, for its “heavy involvement” with Applied Digital.
Insiders at B Riley hold a 48.4% stake in Applied Digital and will exit their position as it becomes clear that the company’s claims “make no sense,” Wolfpack alleged.
The short-seller said Stability AI, Applied Digital’s biggest prospective AI customer, was also “dubious.”
Applied Digital, Stability AI and B Riley did not immediately respond to Reuters’ requests seeking comment.
Dallas, Texas-based Applied Digital is the latest target in a series of short-seller attacks that have shaken corporate America this year.
Earlier, Hindenburg Research launched a scathing attack on Carl Icahn’s investment firm Icahn Enterprises and digital payments firm Block. Both the companies have denied Hindenburg’s allegations.
(Reporting by Pritam Biswas in Bengaluru; Editing by Maju Samuel)
