Temenos shares plunged more than 35% after Hindenburg Research announced a short position in the Swiss software business and cited accounting concerns in its research.
Temenos shares fell over 35% on Thursday after Hindenburg Research announced a short position in the Swiss software company and cited accounting issues in a report.
Temenos claimed its board of directors fundamentally contested Hindenburg’s assessment and expressed confidence in the strength of its business, performance, and financial position.
“The report contains factual inaccuracies and analytical errors, together with false and misleading allegations, which are intended to adversely impact the company’s share price,” Temenos said. “The company was not contacted in advance for any comment on the report.”
Temenos stated it would disclose its audited results for 2023 after the market ends on February 19, and that the results were in line with a pre-results announcement made on January 19.
Temenos stock closed down 28.2% to 63.5 Swiss francs. Trading was halted and reopened several times.
Hindenburg’s research, published on its website, claimed to have discovered “hallmarks of manipulated earnings and major accounting irregularities.”.
The research, based on public documents and conversations with former employees, claimed that Temenos secretly funded the purchase of its own software.
Temenos, which connects banks’ consumer and client-facing divisions to back-office processing departments, announced a deal with fintech company Mbanq in 2021, allowing them to expand into the US market.
According to the Hindenburg report, as part of this agreement, Mbanq agreed to purchase around $20 million in software licenses and maintenance contracts from Temenos.
Hindenburg said that when Mbanq became dissatisfied with the arrangement, Temenos invested in the fintech using convertible notes. The story referred to court documents and internal communications between Mbanq executives.
Hindenburg said that this was an example of a “round-trip transaction,” in which a corporation sells something to a partner or subsidiary, books the revenue, and then buys it back through another channel.
The Hindenburg study also claimed that Temenos executives cashed out $1.1 billion in stock holdings over the last decade but only spent $26 million.
Nathan Anderson started Hindenburg Research in 2017 as a forensic financial research agency that searches for accounting problems and mismanagement and places wagers against firms if it discovers potential misconduct.
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