Spruce Point short Porch Group, sees up to 70% downside for shares
Spruce Point issued a new short report on Porch Group, calling it "a classic example of a company that has never found a business model that makes sense." According to the short-seller's report, the company "was in technical default with a going concern warning before using the frothy SPAC market as an opportunity to allow insiders to dump shares.
" The firm argues that "at best Porch's CEO has unethically portrayed his biography to investors when at The Active Network by concealing his involvement in HelpScore, the predecessor to Porch.com, and at worse committed securities misrepresentation." The firm also said it believes Porch has "recorded a $33M transaction on its book that had absolutely nothing to do with the Company, and made conflicting statements about it to the SEC." Spruce Point, which alleges that Porch "has artificially inflated its gross margin, and positioned this metric to investors as an appropriate valuation metric," sees 50%-70% downside risk for the shares from current levels. In morning trading, Porch shares are down 94c, or 5%, to $16.40.