Short-seller’s report charges AI marketing cloud provider with questionable accounting practices and running consent farms to collect data.
Zeta Global announced it will hold a video call on Wednesday to address accusations that caused its stock price to drop 34% in the last week.
A report last week from Culper Research claims the AI marketing cloud company “formed ‘two-way’ contracts with third-party consent farms wherein the Company simultaneously acts as both a supplier and a buyer of consumer data, not only allowing the Company to flatter reported revenue growth, but raising round tripping concerns.”
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Round tripping is when a company sells an unused asset to another company while agreeing to buy back it or similar assets at about the same price.
Since last Wednesday, when the paper was released, Zeta’s share price has fallen from $ 28.4 to $ 18.6.
Zeta said in a statement that the report is filled with falsehoods, speculations and incorrect information.
“[It] is misleading and conveys, at most, a superficial understanding of Zeta’s business and practices. It relies heavily on questionable sources that get basic facts wrong, cites financial metrics that are off by hundreds of millions of dollars, and doesn’t even correctly identify the Company’s Big Four auditor.” Culper said Zeta’s auditor is E&Y, but the company’s auditor is Deloitte.
Culper also accused Zeta of running a “network of consent farms i.e., sham websites that hoodwink millions of consumers each month into handing their data over to Zeta under false pretenses, baited by job applications, stimulus money, or other rewards that simply do not exist.”
The research firm is owned by Christian Lamarco, who is known for short-selling stocks and may profit from a drop in Zeta’s stock price. A disclaimer for the report on Zeta states, “You should assume that Culper…has a position in any securities covered herein.“
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