Natera Stock Price Plunges After Hindenburg Research Report
Today, Hindenburg Research published their report titled - Natera: Pioneers In Deceptive Medical Billing and takes a short position. As expected the price of the Natera stock, $NTRA dropped significantly after this announcement. While it was a significant drop on daily chart, $NTRA price has already been on downtrend. Just few months ago the price of this stock was trading at around $120. Yesterday it was trading a little above $50. Today it dropped as low as $26 and pulled back up to $36.
Hindenburg Research is a company that specializes in forensic financial research and also engages in taking market positions, usually short positions. If we look at what kind of situations they focus on their research, it becomes clear why they take short positions. It is listed on their website, what kind of information they try to uncover:
- Accounting irregularities
- Bad actors in management or key service provider roles
- Undisclosed related-party transactions
- Illegal/unethical business or financial reporting practices
- Undisclosed regulatory, product, or financial issues
Who knew such activities would be happening with publicly traded companies?! Publicly traded companies may seem to be held to higher standards and create false confidence that everybody is playing by the rules without any deception tactics. Unfortunately, that is not the world we live in. Deception tactics are always present one way or the other when there is money involved. For this reason, I appreciate the type of research organizations or companies like Hindenburg Research do in uncovering fraud or deception.
Hindenburg Research is not just a research group, its intention or motivations are to find the market edge by focusing on fundamental analysis backed with thorough research. However, they do so in a transparent manner. They take a position and announce it. It is kinda a smart trading strategy, especially when you have a decent following. Conducting a lengthy research, confirming the flaws in the fundamentals and discrepancies in pricing already gives a good edge to take a short position. But now announcing with a published research also helps with this short position playing out as planned, as others also follow in either taking a short position or closing their long ones.
This shows, once again, that money is made in the markets not only in longing stocks or other financial instruments. There are plays made on short side of the trading as well, everyday. Taking a short position can be risky business. So is taking a long position. For some reason, we the retail traders see more risks in taking short positions rather than long ones. Shorting may even seem counter-intuitive to our human nature. In fact, it is almost same as a long position when it comes to the risks and rewards. However, not all stocks are available to be shorted depending on the brokerage used. Some platform may not have shorting options all-together. Alternative to taking straight short position on a stock is buying put options. Stock options are even available on platforms like Robinhood.
None of this is a financial advice, nor am I suggesting shorting is a better way of trading. Rather I am reminding myself that shorting is also an option when trading, and without the ability to trade both side retail traders might be not fully prepared or have developed a strategy that can work in markets under any conditions.
Hindenburg Research has done a good job with their research and it is an interesting read. Feel free to read the full report by following the link above. In short, their research found that Natera has been engaged in deceptive medical billing tactics. While it does seem like the company itself is a complete fraud, based on the findings the stock price did seem to be overpriced. It is jut my opinion. You may come to a different conclusion.
Among the troubling findings in addition to billing deceptions is that Natera has never generated a profit and has been losing money, has been operating in a deficit, already had issues with Department of Justice with fraud allegations and paid a settlement in the amount of $11 million. There is a lot more in their findings. Not sure how their stock price can recover at this point, at least in a short term. But who knows. Markets are crazy. Crazy things happen. Be careful with your investments, and trade wisely with doing proper research.
What do you thing about shorting as a trading strategy? Would you consider it? Let me know in the comments.
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Shorting in trading is an option which can also yield more money but also depends on your money management, going long or shouting the market it's not the big deal ,your trading strategies is the real deal,you short the market because others are shorting the market,your strategy should tell you what to do in the market, shorting strategy is good
i love Hindenburg, they've been doing some great work and at great risk, especially in the Chinese market, even though we live in the golden age of fraud calling out fuckery by companies still comes at great risk
I do financial analysis of companies, and I have been witnessesed accounting irregularities many times especially for tax evasion. If they have a good accountant, they can hide the deception somewhere in the balance sheet or take it out of the balance sheet.
I believe their impact is pretty nice and encouraging and still need more development in the nearest future in other to invest
I think this s very good impact and encouraging as well which I believe more developments need in 5he future
Yeah, the auditor's who look out for the public are hired by the company to do the auditing, so there is a major conflict of interest there. If they find information that will make the company look bad then they run the risk of losing their client to a competitor. It's kind of a stupid situation really. It sounds like Hindenburg Researchis an independent firm and it's great that they publish their findings for the public, even if it is in their own self interest.
I know nothing of shorting, other than a basic understanding of how it works, so I've never shorted a stock.
Shorting is dangerous and I don't really play with it much. In a way, I would rather buy a put rather than short a stock outright.
Hindenburg Research has done quite a bit of research like this before and I remember Nikola Motors. It definitely went down the drain and I feel bad for anyone who jumped in.
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I have never shorted stocks. I buy and sell that is all sometimes I see stocks and think it could fall, I could make some money go short. But not tempted as you have to eventually go long. You need to buy it back. In theory profit is limited but stock could ris to $100, you pay massive. GameStop is an excellent example !
Yes that is true, I believe that , their impact really encourage . This give them future outstanding in aspect of development.
Oh my, glad I don't hold any of their stock! :P