👉 Background: Cettire is the luxury goods marketplace that listed on the ASX in December 2020. And since those early days, Cettire has grown to over one million orders per year, selling high-end brands such as Louis Vuitton, Prada and Valentino.

👉 What happened: Last week, a global due diligence firm released a deep dive into Cettire, which highlighted complex company structures, opaque supply networks and a poor complaints-handling processes.

👉 What else: But on Monday, Cettire “reject[ed] entirely” the allegations. Cettire claims that this report was actually commissioned by a Cettire short- seller. Next thing you know: Cettire's share price was up 10%. Since then though, Cettire has returned back to the price pre-scandal.

What's the key learning?

💡Short selling is the process of borrowing shares from a broker, selling those shares to someone at current prices…with the aim of buying them back later at a lower price.

💡Often, short sellers will do a lot of investigative research on a company by understanding company structures, their suppliers, speaking to customers
And once they have conviction that something is a bit fishy, they’ll take a short position in the company... and release a report justifying why.

💡We’ve seen examples of this in the past with mixed results:

• Short seller Glaucus Research issued a report alleging overvaluation of assets at Blue Sky, which ultimately exposed them and led to their demise.
• Short seller Blue Orca alleged that Seek had fake job posts in its Chinese business, which ultimately was unproven - with Seek's share price bouncing back.

All in all, it’s hard to know right now whether the report into Cettire is accurate. But we do know that it didn’t seem to faze Cettire’s investors.