Shares in Loop Industries of Canada fell 33 per cent on Tuesday after short-seller Hindenburg Research alleged the company’s claim to possess revolutionary recycling technology is a “fiction”.
After publication of the new Hindenburg report, Nasdaq-listed Loop shares fell to $7.83 on Tuesday after closing at $11.61 a share on Monday.
In a statement, Loop said Hindenburg’s claims were “unfounded, incorrect or based on the first iteration of Loop’s technology”.
Loop, which has never generated revenue, has announced partnerships to provide recycled plastic to companies such as Coca-Cola, Danone and L’Occitane but has not delivered on its promises, the report states.
Coca-Cola told the Financial Times it has not yet received any recycled plastic from Loop. The other companies did not respond to requests for comment.
Loop has said it had developed a “revolutionary” process to recycle plastic from sources that would typically be considered garbage — including “plastic bottles and packaging, carpets and polyester textiles of any colour, transparency or condition and even ocean plastics that have been degraded by the sun and salt”.
Hindenburg, which makes money by betting that share prices will fall, said Loop’s claims were “technically and industrially impossible”.
Hindenburg said the company operated two separate research labs. One was led by two brothers who produced “incredible results” despite having “no apparent postgraduate studies in chemistry or polymers or any work experience other than Loop”. The other lab, staffed with “rank-and-file” scientists, could not replicate their findings, it claimed.
“We found a combination of technology that could [work], but it was too expensive to be viable,” one former Loop employee told the FT. “When you work at the lab scale you can get good results, but going up to the industry scale, you face trouble you never see at the lab.”