Is Pirelli hiding Russia profits? Short-seller report triggers crash

Italian tire giant Pirelli saw its shares take a dramatic tumble on Thursday after U.S. short-seller Grizzly Research announced a short position in the company, raising serious allegations about its operations in Russia.

In a newly published report, Grizzly Research questioned whether the prominent tire manufacturer is hiding the true extent of its profits in the region. According to Russian corporate filings obtained by the short-seller, an estimated 10% of Pirelli’s net profit actually stems from its Russian operations, News.Az reports, citing Reuters.

This figure stands in stark contrast to Pirelli’s official financial disclosures. In its May quarterly report, Pirelli attributed less than 6% of its total revenue to Russia, the Middle East, Africa, and India combined.

The report from Grizzly Research leveled even heavier accusations, suggesting that Pirelli's alleged business growth in the country might be fueled by demand stemming from the war in Ukraine. The short-seller warned that the company’s ongoing ties to the Russian state could pose a security risk to Western nations.

Following the release of the report, Pirelli’s stock plummeted by as much as 13.4% at the market open in Milan, before slightly recovering to sit 5.4% lower later in the morning.

Pirelli has not yet responded to requests for comment. Following Russia's invasion of Ukraine in March 2022, the tiremaker stated it had halted all investments in the country and scaled back local factory operations strictly to fund employee salaries and social services.

News.Az 

By Aysel Mammadzada