Nuvei Faces Short-Seller Report After Ryan Reynolds Investment

(Bloomberg) — Shares of Nuvei Corp. slipped, then recovered after short seller Spruce Point Capital Management published a negative report, on the heels of Hollywood actor Ryan Reynolds’ announcement that he’s an investor in the Canadian payments firm.

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Nuvei tumbled 6% early Tuesday before reversing direction to trade up nearly 1% at C$42.84 at 11:46 a.m.

It’s the second time in two years that Spruce Point has gone after the Montreal-based company, which offers payment services for a number of sectors including the gaming and crypto industries.

Spruce Point said it’s short the stock, citing the potential for a 35% to 50% drop in value. Its report questioned Nuvei’s financial transparency, its links with failed crypto platform FTX and its recent $1.3 billion acquisition of Atlanta-based Paya Holdings Inc. Spruce Point said its analysis shows Paya was losing market share and revenue growth was slowing.

“We believe Nuvei’s underlying business is under pressure for a number of reasons,” Ben Axler, Spruce Point’s founder and chief investment officer, said on BNN Bloomberg Television.

On Monday, Reynolds said he’s taking taking a stake in Nuvei, alongside a marketing pitch he did for the company in several online videos. No financial terms were disclosed. Spruce Point’s Axler asked whether any money exchanged hands or if Reynolds was instead given restricted stock in return for his work.

A spokesperson for Nuvei didn’t respond to requests for comment.

“Like its last report, we believe the short seller is grasping for irregularities without citing material and provable issues,” Keefe Bruyette & Woods analyst Sanjay Sakhrani said in a note to investors. “While we respect the investor’s investigative approach, it’s hard for us to connect all the dots and get on board that anything is actually wrong with the company.“