Al Root

Shares of FTAI Aviation plunged after the aerospace lessor and engine maintenance company said it might be late in filing its annual financial statements following a negative report from a short seller.

FTAI stock was down about 27% in midday trading at $82.30, while the S&P 500 and Dow Jones Industrial Average were up about 0.3% and 0.6%, respectively.

"On Jan. 18, 2025, the Audit Committee of the Board of Directors of the Company determined to commence a review (which included the engagement of independent advisors) in response to the assertions alleged in the January 15, 2025 report issued by Muddy Waters Research (the "ShortSeller Report"), a well-known short-seller," reads part of a news release filed with the Securities and Exchange Commission.

"The Company strongly disagrees with the assertions made in the Short-Seller Report," added the statement. "However, in view of the timing of the Short-Seller Report relative to the preparation of the Company's audited financial statements for fiscal year 2024, and the potential time required for any review of this nature, the Company cannot rule out the [annual report filing] may be delayed."

FTAI owns and leases aircraft and aircraft engines, and repairs aircraft engines. The company does a lot of work on CFM56 engines, which is one of the best-selling engines in the history of commercial aviation. It powers single-aisle aircraft for both Boeing and Airbus.

The Muddy Waters report alleged that the company's accounting was inflating profit margins, among other claims.

Muddy Waters is short FTAI stock. Short sellers borrow shares they don't own and sell them, betting that the price falls so they can buy back stock at a lower price in the future to return to the original owners. The less they have to pay to replace the shares, the more money the short sellers make.

FTAI didn't respond to a request for comment about the Muddy Waters report. It didn't immediately respond to a request for comment about the recent SEC filing.

Several Wall Street analysts defended the company's accounting practices, and the stock, in research notes after the negative report was published, but that commentary hasn't helped much yet. FTAI stock was north of $150 a share before Muddy Waters published its report.

Investors will have to wait and deal with volatility while the board's audit committee does its work.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 21, 2025 12:02 ET (17:02 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.