Latest news in the Darktrace [LON:DARK] saga has the firm hiring Ernst & Young to carry out an independent review of its finances. Shares in the company are down 48% over the six month horizon, but are holding up pretty well in the shorter term. Stock is up over 24% over the last month.
Darktrace is seeking an independent third party review from a reputable accounting firm following accusations from US hedge fund Quintessential Capital Management that the company has been massaging its sales numbers. Using EY is a canny move as it will give the company an independent stamp of approval. Ernst & Young itself will be careful, with this level of scrutiny, to do its homework diligently.
Hedge fund QCM is not alone in its appetite for shorting Darktrace stock: UK hedge fund Marshall Wace has also been known to have a short position on the stock. QCM has published a 69 page report lambasting Darktrace management and sales practices, but most of the issues flagged are in fact historical and pre-date the 2020 appointment of CFO Cathy Graham.
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What is also interesting is that QCM does not seem to be convincing the investor community at this stage, with shares well up in the last 30 days. We decided to run some initial analysis of Darktrade through our AI resources, including the Bridgewise database, to see how the company is stacking up against peers. We may also carry out some further sentiment analysis on the stock for AT+ subscribers in the near future.
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