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Investing.com -- Shares of FTAI Aviation (NASDAQ: FTAI) fell 5% amid concerns raised by Snowcap Research, which echoed previous allegations made by short seller Muddy Waters (NYSE:WAT). Snowcap’s recent report suggests that FTAI Aviation’s Aerospace Segment may be significantly overstated.
The report, following a three-month investigation, includes discussions with former executives and industry experts who question the company’s accounting and public disclosures. Snowcap alleges that FTAI’s Aerospace business model is "an elaborate fabrication" and claims that the company’s profits are inflated with one-off COVID-19 gains and overvalued inventories. These findings come after Muddy Waters accused FTAI of misleading investors by misrepresenting engine sales and inflating earnings before interest, taxes, depreciation, and amortization (EBITDA) through aggressive depreciation practices.
Snowcap further contends that FTAI’s reported EBITDA may be meaningless or even materially inflated, which has led to the company trading at a significant premium. The report suggests that FTAI’s underlying cash flow is much lower than what investors might expect, pointing to a potential substantial downside in FTAI’s stock value.
The market’s reaction to the Snowcap report reflects growing investor concern over the legitimacy of FTAI Aviation’s financial reporting. The company has not yet responded publicly to the allegations made by Snowcap Research.
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