MSCI (MSCI) shares fell at the start of Wednesday's session before clawing back some of their initial losses after Spruce Point Capital issued a Strong Sell opinion on the stock, saying it sees a potential 55% to 65% downside.
The short-selling firm said that after conducting a "forensic financial and accounting review" of MSCI, it has "grave concerns" about the accuracy of its accounting choices and financial reporting, the durability of its growth prospects, and the sustainability of its extreme valuation multiple.
"The world’s largest asset managers and capital allocators depend on and must trust MSCI’s indices, analytics, and ESG ratings to disburse trillions of dollars globally," the firm writes, claiming they do "not believe that anyone has ever fully indexed, benchmarked or evaluated MSCI’s broad range of dubious and aggressive and outright farcical business practices."
MSCI shares are down around 0.9% as of 12:03 pm ET on Wednesday, trading around the $537.56 mark. The stock hit a low of $528.25 earlier in the session.
Spruce Point said it conducted a survey of 60 MSCI clients, which revealed greater competitive pressures in the last 12 months, while they also noted that the company's chief accounting officer resigned in August 2023.