VGI Partners, a hedge fund, is shorting the stock, claiming 20 'red flags'. These are the guys that identified the short on Slater & Gordon.
See AFR article here
I have the VGI presentation but will not post here for legal reasons. But I have attached the slide which lists the red flags.
CTM has come out with a detailed response, which you can read here. They acknowledge that some sites are not genuine brick and mortar locations, and that the technology is not proprietary. But strongly refute all other allegations.
ASIC has since decided to take a closer look in the wake of the massive share price plunge. AFR article here
Personally, I find it difficult to determine which party is most accurate. Both make excellent cases, but my level of forensic accounting skills is not good enough to tell which is right. Indeed, there probably isnt enough publically disclosed detail to know conclusively.
There is the potential that CTM is guilty of fraud, at least in some small part, but that's also near impossible for an outsider to determine.
In any case, the mere suggestion of these red flags is enough to cast a lot of doubt. Enough for the market to severely discount the previous growth and/or quality premium.
Worth remembering that despite the plunge in share price, the forward PE is still ~22 (based on price at time of writing of $20.75). That's not especially high for a company that says it expects underling EBITDA to grow by between 15-20% this year, and still has a lot of potential market share to win. But it's incredibly high if some of VGI's more serious claims turn out to be valid.
I'm putting this in the 'too hard basket' for now.
