Darktrace Shares Plummet After Financial Validity Questions
Darktrace defends financials, and cites compliance with IFRS accounting standards.
Tuesday saw a 10% drop in the price of Darktrace‘s shares after a report from the short-selling firm Quintessential Capital Management (QCM) in New York highlighted concerns about the accuracy of the company’s financial statements. In its 70-page analysis, QCM claims that the company’s revenues, profitability, and growth rates may be inflated. QCM has a short position of 1.3% in Darktrace shares. However, Darktrace has vigorously defended its financial statements, asserting that its management team and board have complete faith in its accounting procedures and the accuracy of its financial reports. The business emphasized that it has strict controls in place throughout its operations to guarantee complete compliance with IFRS accounting rules.
Despite these promises, shares of Darktrace reached 198 pence, the lowest level since its April 2021 stock market debut. The shares were down 4.3% at 210.6 pence at day’s end. Darktrace‘s auditor was identified in the QCM report as Grant Thornton, who declined to comment. Marshall Wace, a UK hedge fund, also has a short position in Darktrace, although a business representative insisted that Marshall Wace‘s position is unrelated to QCM’s and stands alone. The market value of Darktrace shares has decreased by more than 5 billion pounds over the previous few months after plunging 80% from a record high in September 2021.
Although the management team and board of Darktrace have complete faith in the accuracy of their financial statements, it is uncertain whether this will be sufficient to win back investors’ trust. In conclusion, Darktrace shares have fallen sharply since September 2021, when they already had lost 80% of their value due to the most recent accusations made by QCM. The corporation has vehemently defended its financial statements, but only time will tell if this is sufficient to win back investors’ trust. It will be interesting to see how Darktrace‘s status changes over the next several weeks and months as the cybersecurity sector continues to expand and draw investment.
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