American multinational tech firm Ebix Inc. saw its share drop by over 40% on Thursday, dragged by accounting concerns raised by a short seller.
EBIX is down 43.14%, while IJR is down 4.17%.
Hindenburg Research raised concerns over the accounting of Ebix’s Indian unit, which plans to undergo a $4.5-billion initial public offering, claiming that the report does not add up.
The Indian unit EbixCash reported that its prepaid gift card division accounted for 82% of its revenue last year, but its auditor quit after failing to provide details on unusual transactions related to the division.
The report noted that the auditor was unable to obtain sufficient appropriate audit evidence that would give it the capacity to evaluate the “significant unusual transactions” despite a number of inquiries.
The short seller flagged that the Indian unit’s gift card business only had two customers, which do not seem to have functional businesses. It has also had seven different auditors since 2004.
Officials of the company have yet to comment on the matter.