Shares of American telecommunications company Motorola recently fell by more than 5% after short-seller Citron Research criticized the company’s handset pricing to the country's emergency first responders.
Motorola shares which rose by as much as 30% throughout the year loss as much as 5.9% to 76.92 on Monday recording their biggest decline since May last year.
Citron Research founder and editor Andrew Left who has been trying to call out the attention of US President Donald Trump to the company has targeted another company again this time multinational tech company Motorola Solutions saying “What would President Trump think?” in its report on Twitter.
Motorola who remains on of the top communications equipment suppliers to emergency responders is currently holding 84% of the handset sale gross margin in the United States according to Citron Research and a number of outsourcing companies outside and around 9% in Europe.
Citron Research added in its report that despite holding more than a quarter of profits from handset sales in the country, mostly benefits from the excessive handset prices sold to single source contracts in the country.
This was not the first time Citron Research issued a warning against a company’s earnings and growth outlook as it tweeted last January that shares of another American tech company Nvidia are to decline in the coming year. Shares of Nvidia then dropped by 7% but recovered by 3/6% during the same trading session.
Tweets from President Trump about companies going against his plans have also impacted company shares in the past months including Toyota. Trump then tweeted against the
Following the comments from Citron Research, Motorola released a statement saying that the research firm has made a number of false and misleading statements in the past.
Motorola also added that the report from Citron regarding its product and price comparison with Europe and other places are ‘baseless’ explaining that different locations or countries
Gov’t Contracts At Risk
Following the heavy criticism from Citron Research regarding its gross profits, Motorola is now facing a threat on its current government contracts as the report might spark some call for more scrutiny of their papers. This would result in a negative effect on Motorola’s profits and stock which recently inched 5% lower.
“We are proud of our longstanding relationships at the federal, state, and local levels in the U.S. and with governments around the world,” said Motorola in the statement. Motorola defended that the company’s contracts with the government come from a vigorous and competitive bidding process.
Although there hasn’t been a concrete proof to support Citron’s claims and any actual customer complaints also has not resurfaced which leaves a possible comment from the White House a threat to Motorola’s stock.
Later in the day, Khang & Khang LLP announced that it would start an investigation regarding claims and allegations of federal security law violation against Motorola Solutions Inc. Although there is currently no lead regarding the full objective of the investigation, investors should be wary of the stock's movement in the coming sessions.
During Tuesday’s trading, shares of the telecommunications company have declined to by as much as $4.81 or by 5.89% hitting 76.92. The investigations which are ought to spark more independent investigations and market reaction should hit the stock further unless Motorola acts and recovers from the recent damages.