It all started with a post by Twitter user called Market Farce.
Eros International Media, a BSE-listed company has lost nearly 20% of its market value on Monday. The huge drop in its share price has been attributed to an even-larger market share loss for its parent company Eros International Plc.
Shares of the Bollywood film distributor have erased nearly 45% of its value on the New York Stock Exchange in the last one week.
Why has Eros International Plc lost 45% on NYSE and 20% on BSE
It all started with when a Twitter user called Market Farce who claims to be “focussed on uncovering farcical, fraudulent, and dishonest financial activity,” questioned the company's rapid growth in the United Arab Emirates.
Word soon spread, and Wells Fargo & Co, an American multinational banking and financial services holding company, scheduled a conference call with Eros International Plc.
After Eros was questioned about the company's performance in the UAE on Friday, Wells Fargo & Co said that the answers were unsatisfactory.
Eros' UAE consolidated net profit in FY15 grew 36%, significantly higher than the usual average annual growth of 10-12%, according to PhillipCapital.
According to Bloomberg, Eros reported revenue of $103.8 million, was also significantly higher than the $45.6 million in 2014 and $14.5 million in 2013.
A Wells Fargo & Co analyst said that this was in the absence of any clarity on the largest content buyers leading to the significant jump in profits. The analyst also said that it was also not convinced operations outside India accounted for nearly half of the company's revenues.
When questioned about the company's clients driving the sale in UAE, Eros declined to reveal information citing confidentiality. The company also refused to comment on the allegations made by someone hiding behind an alias.
Keeping this in mind, the company's stock was downgraded last week to 'market perform'.
Since then, Eros International Plc's shares have tanked 45% to $14.65 on the NYSE. On the BSE, Eros International Media's shares crashed 20% on Monday, and at 1428 hours, were trading at Rs 358.70, down Rs 79.40 or 18.12% lower from previous day's close.
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