Why Shift4 Payments Stock Is Crashing Today

Shift4 Payments, Inc.FOUR shares are trading lower after Blue Orca Capital issued a short report on the stock.

What Happened: On Wednesday, Blue Orca Capital issued a report announcing that they were short on Shift4 Payments. The group alleges that the company is less profitable, generates less cash, and is more levered than investors are led to believe.

With the CEO facing a potential margin call on their equity-backed loan, Blue Orca believes that Shift4 engaged in "a string of highly aggressive accounting maneuvers" to give the impression of increased gross profit, EBITDA, and cash flow without improving the fundamental earnings power of the business. Blue Orca noted that Shift4 bought out 50% of its independent sales force in 2022 in order to inflate its EBITDA and Gross Profit figures by 24% and 15% respectively.

They believe that these accounting maneuvers were enabled by a poor corporate governance structure, with many members of upper management being closely related, either friends or family, with the CEO.

Shift4 Payments Inc is a provider of integrated payment processing and technology solutions. The company offers software providers a single integration to an end-to-end payments offering, a powerful gateway and a robust suite of technology solutions to enhance the value of their software suites and simplify payment acceptance.

According to data from Benzinga Pro, Shift4 Payments stock was down 11.5%, trading at $60.74 at the time of publication. The stock has a 52-week high of $76.40.