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Investing.com -- IperionX Limited ADR (NASDAQ:IPX) shares dropped 5.6% in Wednesday premarket trading after Spruce Point Capital Management released a critical short report on the titanium producer, estimating potential long-term downside of 70-95% under certain scenarios.
The New York-based investment firm questioned IPX’s commercial viability and valuation in a report titled "A Critical Analysis of Commercial Viability And Valuation Concerns." While acknowledging management’s competence and the company’s goal to reshore the U.S. titanium supply chain, Spruce Point expressed skepticism about IPX’s HAMR technology displacing the established 70-year-old Kroll process.
Spruce Point highlighted several concerns, including IPX management’s overlap with Piedmont Lithium, which previously faced allegations from short sellers. The report also noted that the titanium powder market is already oversupplied with 3.5x more capacity than shipments.
The short seller questioned IPX’s partnerships and customer announcements, suggesting many have expired or are no longer referenced by the company. Despite enthusiasm around an $11 million Ford contract expected to start in 2025, Spruce Point noted no revenues have been booked and IPX listed no inventory on its balance sheet at fiscal year-end.
The report also identified potential discrepancies in IPX’s financial and operational reporting, including issues with Titan’s acreage, capital expenditures, G&A costs, and employee counts. A site visit to IPX’s U.S. headquarters reportedly revealed "an empty office with stacked boxes, mail on the ground, and outdated investor materials."
IPX, which has changed names twice from TAO Commodities to Hyperion Metals and now IperionX, currently has a $1.2 billion market cap. According to Spruce Point, the company trades at 9.7x book value and 24x 2026 estimated revenues, compared to the specialty metal industry median of 1.4x and 1.8x, respectively.
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