// Boohoo attacked by short-seller who claims it exaggerated finances
// Boohoo shares dropped 12% after the claims
Boohoo has come under attack from a British short-seller that said the online fashion retailer had exaggerated its free cashflow by over £30 million.
Shares in Boohoo fell by more than 12 per cent after investor Shadowfall revealed it had bet on a share price fall.
The stock later ended the day 6.8 per cent lower at 334.9p which valued Boohoo at £4.1 billion.
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Shadowfall is a London hedge fund that specialises in taking positions against companies’ share prices.
Shadowfall claimed in a 53-page report that Boohoo had overstated its free cashflow this year by £32.2 million, or 65 per cent, partly because it failed to take into account tax payments.
It also alleged that the company was treating cash generated by its PrettyLittleThing subsidiary as though it owned the business outright despite there being a 34 per cent minority stake.
It could cost Boohoo almost £1 billion to buy this stake, Shadowfall said.
It added that shareholders could have their interests diluted if Boohoo takes advantage of an option to buy out the minority interest in PrettyLittleThing in early 2022.
Meanwhile, rival online retailer ISawItFirst could threaten Boohoo’s market position, the short-seller said.
Shadowfall’s criticism of Boohoo is the the latest high profile short attack on a London-listed firm.
Pets goods retailer Pets at Home defended itself earlier this month against Texas-based company Bonitas Research who said it was misleading investors about a £34 million loan.