Vipshop – Gross Vs. Net

Paul Gillis

Professor, long/short equity, foreign companies

Vipshop – Gross Vs. Net

May. 17, 2015 5:33 AM ET  |  About: Vipshop Holdings (VIPS)

Two research reports came out recently against Vipshop Holdings (NYSE:VIPS), a Chinese e-commerce company listed on NASDAQ. One report, from Beijing based J Capital, apparently focuses on differences between US regulatory filings and Chinese statutory filings. The J Capital report has not been made public, and my observations are based on the press reports. The company has pushed back on this report saying J Capital read the wrong statutory filings. I don’t put much faith in these types of analyses, since there are many reasons why those filings might be different that don’t point to fraud in the US filings.

The other report, from heretofore unknown research firm Mithra Forensic Research (Mithra). Mithra has taken the more traditional short selling research methodology so effectively used by the likes of Muddy Waters that involves throwing the kitchen sink at the company. At the heart of Mithra’s allegations is that VIPS is improperly recording revenue. Continue reading