Capybara Research says FingerMotion relies on accounting gimmicks, sets $1 target

In a recently published report, Capybara Research says it holds a short position in shares of FingerMotion (FNGR) and that it believes the stock price is headed lower, as the promotional campaign ends and share dilution begins. “The company’s $300 million Shelf Registration and $25 million ATM agreement are likely triggers for significant shareholder dilution. We believe FingerMotion relies on accounting gimmicks to portray large revenue growth. FingerMotion’s balance sheet is deteriorating with eroding gross margins, and concurrently, its cash burn is on the rise. This combination paints a concerning picture of the company’s financial health,” the report reads. Furthermore, Capybara Research says “it is evident that FingerMotion is operating with a fundamentally flawed business model that deviates from the path to profitability… Inevitably, the company will resort to diluting its stock through the execution of its shelf registration, whether through its ATM agreement, secondary offerings, or large amounts of shares held by insiders with negative intentions to shareholders. Ultimately, the losers in this situation will be the unsuspecting investors who become ensnared in this investment trap. As a result, we iterate a $1 price target.”