Key Points
(Bloomberg) -- WSP Global Inc. shares plunged after Spruce Point Capital Management LLC said it was shorting the Canadian engineering firms stock, slapping it with a strong sell" recommendation..
Spruce Point, a prominent US fund that previously targeted Canadian firms Lightspeed Commerce Inc. and Nuvei Corp., on Wednesday criticized WSP Globals opaque financial reporting." WSP Global didnt immediately reply to a request for comment..
Wednesdays share price move erased C$1.54 billion ($1.5 billion) in market capitalization from Montreal-based WSP Global, one of the largest firms in Canadas industrial sector..
Cash flow and earnings quality appear to be embellished by aggressive and problematic accounting revisions," Spruce Points report said, adding that the firm believes adjusted margins for earnings before interest, tax, depreciation and amortization are actually declining, instead of increasing. . The company in late February reported an adjusted ebitda margin of 17.6% for 2023, up from 17.1% a year earlier..
WSP Global shares fell as much as 6.9% in Wednesday morning trading, their biggest drop since December 2020, after Spruce Point said it sees a 25% to 50% downside risk for the companys stock..
