Shares in Inogen have fallen nearly 3% today after short-selling firm Muddy Waters released a new research report calling into question the portable oxygen concentrator developer’s total addressable market and suggesting the company “created an egregiously false narrative.”
In its report, Muddy Waters claims that the total addressable market for Inogen’s products “is actually shrinking,” and adds that it believes that the company will “heat peak sales no later than next year.”
“INGN embodies much of what is dysfunctional about today’s capital markets: Misleading statements by management, shoddy market research presented as authoritative, thorough sell-side capture, and of course significant enrichment of insiders through stock sales,” Muddy Waters said in its report.
The short-seller said that Inogen’s claim that its total addressable market is three million, and that it’s growing at 7% to 10% annually, are based on estimates from research firm WinterGreen Research and that the estimates “appear to have little grounding in reality.”
Muddy Waters was highly critical of the 2017 report from WinterGreen Research, which the claims were based on, going as far as to suggest that WinterGreen plagiarized the New York Times.
The firm claims the total addressable market to be only 1.3 million users, and said that at its forecast of peak earnings, it only values Inogen shares “at $46 per share, a 67% decrease from its current price.”
Inogen has not yet officially responded to the report. Shares in the company are down approximately 2.6%, at $136.08 as of 1:45 p.m. EST.
In 2016, Muddy Waters raised allegations that certain St. Jude Medical cardiac rhythm management devices were extremely vulnerable to hackers, leading to a drawn-out battle between the medical device maker and short-seller.
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