Muddy Waters' Latest Short Is Plunging After Revenue Shortfall

(Bloomberg) -- Muddy Waters has struck again.

Chinese tutoring company TAL Education Group had already been reeling from allegations in June made by Carson Block, a short-seller who runs activist investment firm Muddy Waters. The stock is tumbling even further Thursday after TAL issued a second-quarter revenue forecast that trailed the lowest estimate from Wall Street analysts.

In response to a question on the earnings conference call, management cited a slowdown in the growth of its offline business for the guidance shortfall and said it will be more cautious about giving a financial outlook due to policy uncertainty.

The American Depositary Receipts for Beijing-based TAL Education sank as much as 17 percent in New York trading and are now down around 23 percent since Block first announced his short.

Block, who previously called the firm’s profits "fraudulent" on Bloomberg TV, did not get a chance to ask a question on the conference call, according to a Muddy Waters tweet.

"$TAL just called Peiyou overall enrollment growth "healthy". We think offline growth has gone negative. Investors need specific numbers, not growth rates," another tweet from the Muddy Waters handle said.

Block has wagered against Chinese companies in the past, many of which he claims engage in fraudulent behavior. Forestry company Sino-Forest Corp. lost more than two-thirds of its market value in two days after he first criticized it in 2011, and was subsequently delisted.

TAL Education didn’t immediately respond to an email request for comment.

To contact the reporter on this story: Arie Shapira in New York at ashapira3@bloomberg.net

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Dave Liedtka

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