Qutoutiao sinks after short report claims 74% of sales are 'fake'

Shares of Qutoutiao moved lower after a short report from Wolfpack Research claimed that 74% of the company's sales in 2018 were "fake" and 74% of its reported cash balance were "non-existent." After analyzing more than 50,000 ads on Qutoutiao's platform, Wolfpack says "the results were shocking." More than 25% of Qutoutiao's ad traffic is directed to undisclosed related parties owned by the company's CEO, and 21% originated from the company itself, according to Wolfpack, a firm known for shorting the names it covers. Qutoutiao's top four advertisers represented 69.7% of its ad-traffic in Wolfpack's sample. Number one is an undisclosed related party owned by the company's CEO, number two is a subsidiary, number three recently sued the company for copyright infringement, and number is going through a Chapter 11 bankruptcy, Wolfpack writes in a reported posted on its website. Shares of Qutoutiao, which operates mobile content platforms in China, are down 8%, or 22c, to $2.63 in early trading. "We conclude that QTT exists to enrich its Founder and CEO, Eric Tan, and promote his VC fund's other ventures by creating its own in-house 'advertising agent' in order to direct significant amounts of ad traffic to undisclosed related parties owned by Tan," contends Wolfpack. Reference Link