Article Summary
- Tingo Group’s stock plummets 80% on Nasdaq due to fraud allegations by Hindenburg Research.
- The report questions the founder’s credibility and alleges falsified data and misrepresentation of operations.
- The revelations led to a significant decline in Tingo’s stock price, raising concerns about the company’s practices.
Tingo Group’s stock is down 80% on the Nasdaq because of a report by Hindenburg Research.
In a brief report on Tuesday, Hindenburg explained that there was a sell action on Tingo Group because of financial fraud. Tingo said it has multiple business segments focused on providing mobile phones, food processing, and an online grocery marketplace for Nigerian farmers.
The US-based research firm had identified significant red flags behind founder Dozy.
First, he appears to have fabricated a career claim that he developed Nigeria’s first mobile payment app. We reached out to the app’s actual creator, and he called his Dozy claim “a total lie.” Dozy claimed to have a PhD. In 2007, he maintained he graduated from a Malaysian university with a degree in Rural Development.
The research firm contacted the school to confirm his degree. They replied that they could not find anyone by his name in their verification system.
Backstory
According to Nigeria’s Economic and Financial Crimes Commission, Dozy was arrested in 2017 and charged with eight counts of making fraudulent checks. He later settled the matter in arbitration.
In 2019, Dozy claimed to have launched “Tingo Airlines” and posted social media messages urging customers to “fly Tingo Airlines today.” The media later revealed that Tingo had Photoshopped the logo into an image of the plane.
He later admitted that he never owned an actual plane.
Tingo’s Grocery
Tingo’s grocery division is seven months old, but in the most recent quarter alone he is expected to make $577.2 million in revenue, accounting for 68% of his total reported revenue. The report also added it claimed an operating profit margin of 24.8% would exceed that of comparable large food companies.
However, Tingo does not have a food processing facility. Rather, the company claims its explosive sales and profitability come from acting as an intermediary between Nigerian farmers and obscure food processors.
In February 2023, the company hosted a groundbreaking ceremony for its planned US$1.6 billion food processing plant in Nigeria, attended by the country’s agriculture minister and other politicians.
A popular short pointed out that the depiction of the proposed facility featured in Tingo’s investor materials and ceremony signage was a depiction of the refinery from a stock photography website.
Shares of the fintech company fell more than 50% on Tuesday as Tingo Group shares went short, Hindenburg Research said. The Short seller also accused the company of falsifying financial data and criticized claims by founder Dozi Momobuoshi of developing “Nigeria’s first mobile payment app.”
What you should know
The New Jersey-based holding company has operations in Africa, Southeast Asia, and the Middle East, and its divisions have expanded into agricultural fintech, food processing, and insurance intermediation.
Tingo, the short seller’s fourth target so far this year, is a relatively small firm compared to Indian conglomerate Adani Group, Jack Dorsey’s Block, and Carl Icahn’s flagship Icahn Enterprises.
Short sellers like Hindenburg typically sell borrowed securities and try to buy them back at a lower price to make up the difference.
An inquiry into the Nigerian Communications Commission revealed that Tingo claims he has 12 million cell phone subscribers but is not a cell phone licensee at all. The research firm claimed that Tingo Mobile’s company presentation and its website used stock photos of farmers using mobile phones.
Is Hindenburg Research a credible body?
They short-sellers, and thus by definition have an interest in driving the share price downwards. Of However, that doesn’t mean that their publication is flawed or false, moreso given that much of that information is easily verifiable. Frankly, it doesn’t look good for Tingo.
What a shame