New Horizon Aircraft stock falls after short seller report

Investing.com -- New Horizon Aircraft Ltd (NASDAQ:HOVR) stock dropped 3% Thursday following a scathing short report from Pelican Way that questioned the company’s operations, facilities, and financial practices.

The short seller described New Horizon as a "prospectless eVTOL company scraping by on endless dilution," claiming the firm operates out of a small building at a rural Canadian airport that may be too small to fit a full-sized electric vertical takeoff and landing aircraft. Pelican Way also alleged the company’s other listed address is merely a house in Ohio occupied by the CEO’s wife.

According to the report, Pelican Way investigators spoke with airport restaurant staff who were unfamiliar with New Horizon’s operations, while the airport manager reportedly indicated the company was still in the design phase with only a small-scale model.

The short seller raised concerns about New Horizon’s financial practices, claiming the company diluted 2024 shareholders by approximately 236% while insiders sold millions in stock. The report also criticized the company’s R&D spending as minimal compared to competitors like Joby Aviation (NYSE:JOBY) and Archer Aviation (NYSE:ACHR).

Pelican Way further highlighted accounting issues that allegedly forced New Horizon to restate financials shortly after going public, eliminating "nearly all of its supposed ’development assets’" because the technology wasn’t sufficiently developed. The report also questioned the company’s choice of auditor, claiming the firm MNP was recently sued for gross negligence related to a fraud case.

The short seller concluded that New Horizon "never should have gone public" and predicted shares would move "materially lower."

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