Short Seller Claims Ubiquiti Networks A "Fraud"

Here is a link to his report and the video:

Before we go into statistics and proof that the community is bullshit, lets introduce some logic.

Are people so passionate about their home router that they are telling all of their friends and staying up at night helping other people set up their routers? Do people get “evangelical” about their access point in their homes?

The concept is ridiculous and the numbers Ubiquiti claims are just as ridiculous.

Citron widely misses the mark here, the evangelicals are the dealers, not necessarily the end-users, who in many cases wouldn't even know how to spell Ubiquiti.

Are security cameras sexier than home routers?

Surely we have seen a good deal of passion and proselytizing with several brands on this site.  

NY Times Profile on the short seller of Ubiquiti and his past success: The Bounty Hunter of Wall Street

I changed the title to prepend 'Short Seller Claims' to make it clearer who is calling Ubiquiti a fraud.

I have not yet had time to go through his evidence so I cannot comment any further now. Priority this morning is finishing our HID / Mercury acquisition post. Will return to this after that.

If you don't have time to read the whole pitch, skip to the ultimate fraud giveaway closer, complete with the all caps MADOFF association.

Translation: "Time is running out, sell now and drive the price down, so I can buy them and cover!"

I spent 15 minutes going through the report and my initial feel is that many of the claims are very weak. For example, the claim copied from #1 that Ubiquit's CEO has 'never appeared on CNBC or Bloomberg' is, frankly, nuts. That's not proof of anything and I am stunned that would even be included, since its so obviously speculative.

And their "#1 Red Flag" is equally speculative:

Lots of people use the word 'misunderstood', fraudsters and Nobel Peace Prize winners alike. Ubiquiti's CEO may be a 'fraud' but if the #1 red flag is that he used the word 'misunderstood', that's a very shallow case.

The report also criticizes Ubiquiti's community, alleging that they are vastly inflating the numbers of their community. I have not looked at those details so cannot say what, if any inflation, there might be.

However, the Ubiquiti community is very large. Third party web statistics validate. For example, SimilarWeb reports community.ubnt.com to get 2+ million visits monthly, 8x more traffic than IPVM:

Even looking through the activity at Ubiquiti's forum, it's obvious there are a hell of lot of people participating. You can't broadly fake that level of diversity of comments.

I'd have to spend more time to get a more definitive analysis of this, but upon initial review, I am highly skeptical of the approach this short seller is taken. 

One thing the short seller repeatedly mocks is the FrontRow camera. We tested it and found it poor, but one likely flop product is not a sign of fraud but of a normal business that tries things and sometimes fails. 

Reading about this  at the UBNT Forum:

https://community.ubnt.com/t5/Business-Talk/Damage-to-the-Ubiquiti-name-some-activist-on-CNBC-trying-to/m-p/2067505#M53332

Do not forget they are a "market disrupter". Keep driving the stock price down while I call my broker to buy...

I do not see the Ubiquiti forum as fake. Everybody has an interest and I think Ubiquiti products draw people who are techie and like to converse.

I think this guy is going to be eating crow for MOST of his opinions. His opinion on the Flavor Flav camera may be pretty accurate though....

I take personal exception to the ridicule of someone doing ~20,000 anonymous posts for fun.