Chairperson of Indian conglomerate Adani Group, Gautam Adani, speaks at the World Congress of Accountants in Mumbai on Nov. 19, 2022. Credit – Indranil Mukherjee—AFP via Getty Images
Billionaire Gautam Adani has slipped from being the world’s third richest man to the fourth, after an activist investment firm released a report Tuesday accusing his company, Adani Group, of “brazen” stock manipulation and accounting fraud worth $218 billion, wiping $5.51 billion from his personal net worth by Thursday.
Hindenburg Research, which in the past has shorted—or bet against—companies like electric truck maker Nikola Corp and Twitter, said it holds short positions in Adani companies through U.S.-traded bonds and non-Indian-traded derivative instruments.
Tuesday’s report sent shares tied to seven of the Adani Group’s listed companies falling by more than 5% on Wednesday, taking a $10.8 billion hit, and forcing the company to issue a strong denial of its contents.
Below, what to know about Adani and the corporate corruption allegations.
Who is Gautam Adani?
Gautam Adani is a self-made billionaire, and India’s richest man, with a net worth of roughly $118 billion as of April 2022. Much of this wealth was accumulated during the past three years through his company Adani Group, as the share prices of his key listed companies climbed, pushing the billionaire’s rank to the third-richest man in the world, behind Elon Musk and Jeff Bezos.
The industrialist began as a commodity trader in the 1980s before he founded his company Adani Group in 1988, eventually expanding it into a private infrastructure empire that operates ports, airports, and coal mines across India and the world. The group also has multiple subsidiaries through its data and cable centers and the manufacturing of defense goods. It plans to expand further through a $70 billion investment in green energy businesses in the coming year.
The company’s success has often been linked to lucrative government concessions, thanks to Adani’s close ties with India’s ruling Bharatiya Janata Party. In the past, Adani has been a vocal supporter of Prime Minister Narendra Modi’s vision for a “self-reliant India.”
What do Hindenburg’s findings reveal?
Among other allegations, the report says that Adani Group engaged in stock price manipulation and accounting fraud over the course of decades, and found evidence that the group’s key listed companies fell in value by 85% despite “sky-high valuations.” It also said that substantial debt puts the group on “precarious financial footing.”
The report names several family members—like Gautam Adani’s brothers, Rajesh and Vinod Adani, as well as associates of the Adani Group—for their involvement in major bribery and tax evasion cases. Members of the Adani family have been the subjects of past corruption investigations carried out by the Securities and Exchange Board of India (SEBI) and the Directorate of Review Intelligence. The Hindenburg report also claims that Adani family members allegedly cooperated in the creation of offshore shell entities worth $4.5 billion through forged documents, primarily in tax-haven jurisdictions like Mauritius, the UAE, and the Caribbean islands. Hindenburg said that SEBI was still investigating a case in Mauritius in September 2022, but that no action has been taken against the group so far.
Hindenburg said the report’s findings were based on interviews with dozens of individuals, including former senior executives at Adani Group, thousands of documents, and due diligence site visits in almost half a dozen countries.
How has the Adani Group responded to the allegations?
Adani Group’s chief financial officer Jugeshinder Singh said in an official statement Wednesday that the company was shocked by the report, calling it a “malicious combination of selective misinformation and stale, baseless, and discredited allegations.”
Adani Group did not address specific allegations in its official statement but said it has always been in compliance with the law. The conglomerate also said that the timing of the report suggested malicious intent to “undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on Public Offering from Adani Enterprises,” referring to the group’s plans for increasing the amount of freely traded shares.
On Thursday, Adani Group said in a new statement that it is considering legal action against Hindenburg. “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” said Adani Group Legal Head Jatin Jalundhwala. He added that the report created “volatility in Indian stock markets” that was “of great concern and has led to unwanted anguish for Indian citizens.”
The report was published days before bidding for a $2.5 billion stock sale for Adani’s secondary shares begins Friday, which will include anchor investors like the Abu Dhabi Investment Authority and Morgan Stanley.
Netflix (NFLX) stock slid as much as 9.6% Friday after the company gave a second quarter revenue forecast that missed estimates and announced it would stop reporting quarterly subscriber metrics closely watched by Wall Street.
On Thursday, Netflix guided to second quarter revenue of $9.49 billion, a miss compared to consensus estimates of $9.51 billion.
The company said it will stop reporting quarterly membership numbers starting next year, along with average revenue per member, or ARM.
“As we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact,” the company said.
Netflix reported first quarter earnings that beat across the board on Thursday, with another 9 million-plus subscribers added in the quarter.
ADVERTISEMENT
Subscriber additions of 9.3 million beat expectations of 4.8 million and followed the 13 million net additions the streamer added in the fourth quarter. The company added 1.7 million paying users in Q1 2023.
Revenue beat Bloomberg consensus estimates of $9.27 billion to hit $9.37 billion in the quarter, an increase of 14.8% compared to the same period last year as the streamer leaned on revenue initiatives like its crackdown on password-sharing and ad-supported tier, in addition to the recent price hikes on certain subscription plans.
Netflix’s stock has been on a tear in recent months, with shares currently trading near the high end of its 52-week range. Wall Street analysts had warned that high expectations heading into the print could serve as an inherent risk to the stock price.
Earnings per share (EPS) beat estimates in the quarter, with the company reporting EPS of $5.28, well above consensus expectations of $4.52 and nearly double the $2.88 EPS figure it reported in the year-ago period. Netflix guided to second quarter EPS of $4.68, ahead of consensus calls for $4.54.
Profitability metrics also came in strong, with operating margins sitting at 28.1% for the first quarter compared to 21% in the same period last year.
The company previously guided to full-year 2024 operating margins of 24% after the metric grew to 21% from 18% in 2023. Netflix expects margins to tick down slightly in Q2 to 26.6%.
Free cash flow came in at $2.14 billion in the quarter, above consensus calls of $1.9 billion.
Meanwhile, ARM ticked up 1% year over year — matching the fourth quarter results. Wall Street analysts expect ARM to pick up later this year as both the ad-tier impact and price hike effects take hold.
On the ads front, ad-tier memberships increased 65% quarter over quarter after rising nearly 70% sequentially in Q3 2023 and Q4 2023. The ads plan now accounts for over 40% of all Netflix sign-ups in the markets it’s offered in.
Netflix reported first quarter earnings after the bell on Thursday. REUTERS/Dado Ruvic/File Photo (REUTERS / Reuters)
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Oil prices initially spiked on Friday due to unconfirmed reports of an Israeli missile strike on Iran.
Prices briefly reached above $90 per barrel before falling back as Iran denied the attack.
Iranian media reported activating their air defense systems, not an Israeli strike.
Oil prices gave up nearly all of early Friday’s gains after an Iranian official told Reuters that there hadn’t been a missile attack against Iran.
Oil surged by as much as $3 per barrel in Asian trade early on Friday after a U.S. official told ABC News today that Israel launched missile strikes against Iran in the early morning hours today. After briefly spiking to above $90 per barrel early on Friday in Asian trade, Brent fell back to $87.10 per barrel in the morning in Europe.
The news was later confirmed by Iranian media, which said the country’s air defense system took down three drones over the city of Isfahan, according to Al Jazeera. Flights to three cities including Tehran and Isfahan were suspended, Iranian media also reported.
Israel’s retaliation for Iran’s missile strikes last week was seen by most as a guarantee of escalation of the Middle East conflict since Iran had warned Tel Aviv that if it retaliates, so will Tehran in its turn and that retaliation would be on a greater scale than the missile strikes from last week. These developments were naturally seen as strongly bullish for oil prices.
However, hours after unconfirmed reports of an Israeli attack first emerged, Reuters quoted an Iranian official as saying that there was no missile strike carried out against Iran. The explosions that were heard in the large Iranian city of Isfahan were the result of the activation of the air defense systems of Iran, the official told Reuters.
Overall, Iran appears to downplay the event, with most official comments and news reports not mentioning Israel, Reuters notes.
The International Atomic Energy Agency (IAEA) said that “there is no damage to Iran’s nuclear sites,” confirming Iranian reports on the matter.
The Isfahan province is home to Iran’s nuclear site for uranium enrichment.
“Brent briefly soared back above $90 before reversing lower after Iranian media downplayed a retaliatory strike by Israel,” Saxo Bank said in a Friday note.
The $5 a barrel trading range in oil prices over the past week has been driven by traders attempting to “quantify the level of risk premium needed to reflect heightened tensions but with no impact on supply,” the bank said, adding “Expect prices to bid ahead of the weekend.”
At the time of writing Brent was trading at $87.34 and WTI at $83.14.
