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    Ah yes, GSX again. This idea was first publicized by Citron a month ago, but the stock price went on a tear since. Just quickly scanning to see if any new revelations came out. The smoking gun appears to be a former GSX manager who’s testifying that he ran a botnet to fake users on the platform.

    GSX itself has a room, in this computer room there are over 10,000 machines, we call them the group robots, which is used to control [the operation]. One person can control about 1,000 cell phones without a problem, and these can be operated remotely or from the room, I can control all of the machines. Then I can imitate the data generated by a real student or real buying, this is already a very mature technology

    GSX sites are also leaking a bunch of user data, which they downloaded and analyzed for bot-like behavior. Seems quite convincing all in all.

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      Stock tanked 7% today, looks like MW does have some sway!

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        So when the findings of KPMG’s six-month special audit were published last week, the 74-page report provided for the first time a description of the inner workings of a company that has long been inscrutable. Whether aspects of the structure described were real or fraudulent remains unproven — KPMG did not come to a conclusion, citing “obstacles” compounded by a lack of data — and that lack of clarity has knocked a third, close to €5bn, off the market valuation of a group that had been worth more than Deutsche Bank.

        FT: How the paper trail went cold in KPMG’s special audit of Wirecard

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          Interesting, thanks. Any easy place to look up # of analysts covering?

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            Bloomberg terminal if you can swing it

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            Thanks for the analysis. I wonder what you take is on the new Dropbox product? Will that serve as a differentiating factor?

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              Anything specific you’re referring to? The last big product launch I see is Dropbox Paper

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                This one: https://techcrunch.com/2019/09/25/dropbox-will-start-rolling-out-the-new-dropbox-app-to-everyone-today/

                They emphasise its impact in the latest earnings call: “Millions of users are now active in our new desktop experience on a weekly basis and we’re finding that this cohort of active users is engaging with Dropbox more frequently and using differentiated features…”.

                My worry is that this product is somewhat like Microsoft Office - it can serve as a catalyst for paying user penetration and keep customers “locked in”

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                  Seems like soft integration at best. The article you linked has an example of Zoom “integration”, but it’s just a link that opens up an external Zoom app. Compare to MS Office, where the default is now to save to the cloud instead of purely local storage.

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                Took a look through the 10k. Losing money every year, net loss $33M in 2019. BUT very healthy balance sheet with $155M in cash and only $24M in debt. This means INSP can continue in its current state for 4 more years even without taking on more debt. In other words they have half a decade to improve their tech or hit a moonshot.

                BTW @wolfpack, if nobody’s buying where’d the $82M in revenue come from?

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                  Semi-popular in Germany apparently. But I could see COVID causing a big hit.

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                  The coronavirus pump is insane…Gilead up 9% on “news” that remdesevir trial was inconclusive, but some patients recovered (which we already knew about). Not surprising to see a ton of microcaps try to cash in on this pandemic.

                  As for WORX…yeah looks like a scam. They even have a subsidiary Victory Fighting Championship which is the “premier mixed martial arts organization in the Midwest.” ROFL, you can’t make this shit up.

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                    Very interesting interview with Carson Block (founder of Muddy Waters) where he discusses this short position, among other things.

                    On the possibility of the stock price going upwards:

                    Now, why didn’t the stock continue to go down? If you look at most of the page one holders, and this goes back to what I was saying earlier. I think they felt that the report was correct. They just felt it didn’t matter. You’ll have these large, sophisticated hedge funds say, “Yeah. It’s a fraud. It’s a big fraud. But whatever. We should still own it.”

                    So these are decisions that are made by large allocators on a macro basis. “We’re going to be X percent US, Y percent Europe, Z percent China.” Ok, so now they’ve got Z amount of money going into China. Well, “we need things that are large and liquid.” So that crosses off a lot of names. “We don’t want to be in state-owned enterprises.” So that crosses off even more names. Ok, “What are we left with?” You’re left with a handful of companies that are just going to, no matter how problematic those companies are, I shouldn’t say no matter how problematic they are, but absent a showing of enormous problems, I guess, they’re going to continue to receive capital flows, at least in the environment that we had been in where central banks are just globally trying to force up asset prices as their economic playbook.

                    So the question really becomes, “Do investors think it matters?” That’s what we’re trying to figure out. Even outside of the world of China fraud, this is a question that we have to constantly answer. Because when we look at our bread and butter type of shorts, highly misleading accounting, etc. The bar has gotten higher each year because investors are just more and more unconcerned, just more and more oblivious, or deliberately oblivious to, risk.

                    On investment banks participating in coverups:

                    What’s their role? Years ago, right after we published Sino-Forest, I spoke with the credit analyst at one of Sino-Forest’s investment bankers. This analyst told me, “I figured out that Sino-Forest was a fraud over a year ago. I went to my boss, and I said that.” And my boss said, “Listen, you just be quiet. You don’t have to cover the company.” But, that’s it.

                    On the failure of the big 4 audit firms:

                    Every year, every one of the big four will have a major blowup. And yet everybody thinks the big four brand means something. Every time we short a company, especially if we say it’s a fraud, I just see all of the responses on Twitter. And it’s all “Oh, but it’s audited by so and so.” Like, come on man. So and so last year had three major audit failures.

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                      Word on the street is that there’s about 30% topline fraud tolerance from the CCP. So yeah these are legitimately very large companies with thousands of employees providing a real service. They fudge their numbers some and the government turns a blind eye as long as its not too egregious. See also this thread where sell side Chinese analysts are, shall we say, strongly discouraged from giving sell recommendations to domestic firms.

                      Will be very interesting to see how this dynamic plays out over the next few years…

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                          Note that this is not the massive COVID test kit deal that was announced a few days ago. See related thread: https://activist.cafe/s/8a4zot/scworx_evidence_points_its_massive_covid