Nuvei shares fall after Spruce Point unveils short position

Nuvei

18/04/2023 15:22

NEW YORK, April 18 (Reuters) - U.S.-listed shares of
Canadian fintech Nuvei Corp  NVEI.O  fell roughly 2% after short
seller Spruce Point Capital Management LLC alleged on Tuesday a
recent acquisition is obscuring the firm's growth challenges.  
    The New York-based investment management firm also issued a
"strong sell" rating on Nuvei's stock, saying it faces a 35% to
50% long-term downside risk. Shares in Nuvei are up almost 60%
this year.
    Nuvei did not immediately respond to a Reuters request for
comments.
    In January, Nuvei bought Paya Holdings  PAYA.O , a payments
solutions company, in a $1.3 billion levered deal. Spruce Point
alleged in its report that the acquisition "appears troubled,"
as Paya was losing market share before the takeover.
    Spruce Point said Nuvei's 2023 earnings before interest,
taxes, depreciation and amortization (EBITDA) is falling roughly
40%, if Paya's acquisition is excluded.
    "Nuvei is exposed to slowing inflation and consumer
spending. Our analysis also suggests that its underlying
economics are deteriorating and that it is heavily reliant on
buoying its stock price as a tool to attract, retain and
compensate employees," it said.
    The report also challenged Paya's number of clients, based
on talks with a former Paya executive, saying it never had one
million customers as it mentions.
    The short seller also said Nuvei may have an equity interest
in bankruptcy crypto exchange FTX and failed to disclose its
total crypto and digital exposure.      
    

 (Reporting by Carolina Mandl, in New York
Editing by Marguerita Choy)
 ((carolina.mandl@thomsonreuters.com; +1 (917) 891-4931;))