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id: 667, Created by Stan Vick, Scout
Shift4 Payments (FOUR) "Blue Orca Report" Case
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- In April 2023, Blue Orca issued a report accusing Shift4 Payments of engaging in unlawful business practices.
- $FOUR fell 8% and lost $335M of its market capitalization.
- Shareholders suspect FOUR & Its Leaders of misbehavior that led to investment damages.
On April 19, 2023, short-seller Blue Orca issued a report alleging Shift4 Payments (FOUR) and its Leaders in unlawful business practices.
Among other things, the Report stated:
- The company appears to be a roll-up of low-tech POS systems and payment processors that is substantially less profitable, generates less cash, and is more leveraged than investors realize.
- The CEO's large stock pledges threatened a margin call, forcing the company to engage in highly questionable and hyper-aggressive accounting maneuvers to keep the stock afloat, including recalling and redepositing funds as cash from operations.
- Governance issues also arose, including a CFO departure and SEC correspondence over accounting, while the CEO engaged in stock promotion without making open-market purchases and with insider ownership filings revealing him as a net seller.
- The company's aggressive accounting games and M&A activity inflated its gross profit, Adj. EBITDA, and operating income, while its buyout of independent distributors and Q4 2022 cash account withdrawal inflated operating cash flow, leading to true leverage far higher than reported by the Company.
On this news, the $FOUR fell 8.68% and lost $335 million of its market capitalization, injuring investors.
Considering the allegations stated in the report, Investors have reasons to suspect $FOUR & Its Leaders in unlawful actions that led to serious investment damages for shareholders.
Failure to Disclose,
Shock Event Date
19 April 2023
18 August 2023
Lead Plaintiff Deadline
17 October 2023