Company that is shorting Tucows releases report blasting company.
The same anonymous stock research group that targeted Web.com about four years ago is now going after Tucows.
Copperfield Research released a report about the domain name, mobile and broadband company titled “Cashing in on Neo-Nazis, Child Porn, & A Hidden Lawsuit as Insiders Dump”. The report’s authors have a short position in the company.
The report highlights three major grievances with Tucows (NASDAQ: TCX), a company whose stock doubled in price last year: all three of its business segments have issues, it is helping people operate unsavory websites, and it hasn’t disclosed its imminent loss of domains to Namecheap.
The hyperbole-filled report has some valid points, but I’m the type of person who sees a few misleading statements and then assumes that many of the other statements are wrong.
For example, the report blasts Tucows for its high churn rate when it took over the subscriber base of failed MVNO RingPlus. However, Tucows explicitly stated in earnings calls that it expected very low conversion from this group because RingPlus offered free service.
Also, the report devotes significant ink to a handful of bad websites that have registered their domains within the Tucows ecosystem. The report cites multiple websites with domain names that are registered at Tucows but does not draw a distinction between hosting and domain registration. It amusingly blasts the qualifications of one of Tucows’ compliance offers because she also like to DJ in her spare time.
On the NameCheap issue, it will be interesting to see how much of an impact the loss of Namecheap’s domains will have on Tucows. The revenue hit is real but the profit hit is unclear.
Shares in Tucows are down about 8% today. After opening the year around $70 they are now trading for $55.