Vistaprint common (VPRT): -39% in one day
When done well, fraud is highly profitable. And it’s common wherever there are not extreme penalties for it. This explains why so many CFOs are told by senior executives to beautify their company’s financial statements and prospects. It’s another thing entirely when the company itself is defrauding customers. Take Vistaprint as an illustration of both.
In the past few years almost half of Vistaprint’s net income came from charging its customers unauthorized fees–which eventually attracted the attention of the Better Business Bureau. On the same day Vistaprint announced that it would cease making unauthorized charges, it also reaffirmed earnings guidance for the year. I took this as a red flag and established a short position at around $58 per share. Form 4′s showed regular insider selling but no buying. I wasn’t surprised when Vistaprint soon lowered earnings guidance and the stock fell below $45, where I covered my position.
After a few months VPRT crept up to $50 a share and I re-shorted the stock thinking that it was still overvalued. Today it’s at $33.
Vistaprint not only defrauds its customers; management is incompetent.
