• Research

Aug 19, 2016

S3 BLACKLIGHT: Citron Research Looks for ADS Price to be Halved

Citron Research has published a research report on Alliance Data Systems Corp (ADS US) today calling for a $100 price, down 50% from today’s $200.15. The main focus of the Citron report is the mischaracterization of ADS as a Business Services or IT company when actually most of its revenues are derived from credit card based banking transactions. Valuating ADS as a tech company nearly doubles its multiples and results in a $200/share price, by re-bucketing ADS into the Banking sector its stock price would cut 35% to 50%, according to Citron.

Short interest in Alliance Data has been dropping since 2013 when short interest averaged almost $1.8 billion. By 2015, average short interest was down 63% from its 2013 highs to $660 million. Short interest continued to drop in 2016, bottoming out in mid-May at $310 million and has consistently grown since then. ADS short interest is now $657 million, up $104 million in the 3rd quarter.

For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC     Ihor.Dusaniwsky@S3Partners.net

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.


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