Shares of Swedish telecommunications company Sinch plunged for a second day on Tuesday, after the company targeted by short sellers said it will restate its past financials.
shares skidded 20%, a day after plunging 28%, when the short-selling research firm Ningi Research said it had inflated its financial results.
In a fresh statement, Sinch said a review of its cost of goods sold for historical periods found adjusted earnings will be downwardly revised by 162 million krona ($15.2 million).
“In light of the unusually strong share price movement on July 11, which followed publication of a third-party analysis discussing Sinch’s financials for 2021, the company has decided to disclose this information even though remaining parts of the upcoming Q2 results have not yet been finalized. Whilst the third-party analysis does not discuss reassessment of Cost of Goods Sold, the analysis claims that revenues for 2021 are overstated, which is something that Sinch strongly opposes,” the company said in a statement.
Sinch said the issues arose from how it invoices mobile operators. It said a detailed review of supplier invoices concluded that accurals were about 1.3% too high. “The accrual process in 2021 was affected by a complex technical setup augmented by recent large acquisitions, interlinkages between multiple legal entities, and inadequate support systems and processes. Multiple process improvements have been implemented and resources increased to minimise the risk for future deviations of this magnitude,” Sinch said.