Jun 16, 2022

Blue Planet Studio/iStock via Getty Images Ebix (NASDAQ: EBIX ) shares are plunging 36% in Thursday premarket trading after Hindenburg Research published a new short report on the technology-powered conglomerate. Hindenburg pointed to the company's "massive near-term debt load" in a backdrop of rising interest rates, saying "we see significant solvency risk over the next 12 months." The risk of solvency comes as Ebix ( EBIX ), which has a market cap of nearly $800M, is planning a $4.5B debut of EbixCash, its wholly-owned Indian subsidiary. The problem is "we think a substantial portion of EbixCash’s gift card revenue is non-existent," according to the report titled "This House of 'Cards' Seems To Have a Glaring Fake Revenue Problem." "For Ebix, the IPO is a race against the solvency clock: the company has $643.9 million in debt coming due in February 2023 and only $75.9 million in cash and cash equivalents as of last quarter-end," the report said. Note that EbixCash's gift card division accounted for a whopping 82% of revenue last year. Meanwhile, SA's Quant Rating screens EBIX stock as a Hold, with the poorest mark in growth. Take a look at how Ebix ( EBIX ) has fared during the first quarter . To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.