Month after Hindenburg report, Adani stock fall shows short seller’s findings could have been right


A month after the release of the Hindenburg Research report, which claimed stocks of the Adani Group’s companies are substantially overvalued, its assessment seems to be turning out to be correct and in some cases — nearly exactly so. The report was released on 24 January. In its original report, Hindenburg Research, a US-based short seller, had said that the stocks of the Adani Group’s seven listed companies “are 85 per cent overvalued, even if you ignore our investigation and take the companies’ financials at face value”.

Data from the Bombay Stock Exchange (BSE), as of the close of trading Thursday, showed that several Adani companies’ stock prices had indeed fallen by close to 70-80 per cent….

The flagship company, Adani Enterprises, was the next worst performer, with a fall in share price of nearly 60 per cent over the past month. This, however, could have been exacerbated by a recent report by the crowd-sourced online encyclopaedia, Wikipedia, which said it had found multiple instances of employees of the Adani Group improperly editing and altering posts relating to Adani Group chairperson Gautam Adani, his family members, and of Adani Enterprises, among others.

“Over 40 later banned or blocked sockpuppets or undeclared paid editors created or revised nine related articles on the Adani family and family businesses,” Wikipedia’s report said. “Many of them edited several of the articles and added non-neutral material or puffery.” Following the release of Wikipedia’s report, shares of Adani Enterprises and some other Adani companies fell as much as 12 per cent, intensifying their downward trend….