Investing.com — Muddy Waters Research took a short position in FTAI Aviation Ltd. (NASDAQ: FTAI), causing the company’s shares to drop 4%.
The research firm accused FTAI Aviation of misleading financial reporting, saying the company’s revenue from maintenance and sales of individual modules is significantly lower than reported.
Muddy Waters claims that FTAI Aviation misled investors by recording one-time engine sales as Maintenance, Repair and Overhaul (MRO) revenue in its Aerospace Products (AP) segment. This alleged misrepresentation allegedly led to an apparent story of FTAI’s AP revenue growth, which Muddy Waters believes was largely due to asset sales, specifically the sale of entire engines.
The research firm estimates that approximately 80% of FTAI Aviation’s adjusted EBITDA in the Aerospace Products segment comes from sales gains, which they believe are primarily from the sale of entire engines. Muddy Waters suggests that the motive behind these alleged misrepresentations is to generate a valuation significantly higher than that of a leasing company.
The research firm also pointed out that Fortress, a major shareholder, sold a substantial amount of shares in a secondary offering in May 2024, which they believe is based on FTAI Aviation’s misleading narrative.
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