Spruce Point Sees Potential 55% Downside for MGP Ingredients Shares

By Sam Boughedda 

MGP Ingredients (NASDAQ:) shares fell more than 4% in early Wednesday trading after Spruce Point Capital released a short report on the company.

MGP Ingredients produces and supplies distilled and branded spirits and food ingredients.

Short seller Spruce Point said it sees the potential for between 35% and 55% downside in MGPI shares, which are up over 15% in 2022. In addition, the short report claims that the company’s 2021 merger with branded beverage company Luxco “has been an abysmal failure.”

In addition, they state that the merger is “failing to meet its promoted benefits” despite potentially spring-loaded results and that MGPI is making unusual cash flow and reporting revisions that “point to historical financial misstatement.”

The report is the second time MGPI has been targeted by Spruce Point. Back in 2017, Spruce Point cautioned about what it claimed were accounting issues and excessive stock promotion regarding MGPI’s transformation to a liquor company.

On Monday, Wedbush analysts initiated coverage on MGP Ingredients with an Outperform rating and a price target of $125.

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