LuxUrban Hotels Inc, a company utilising an asset-light business model, has issued a response to allegations made in a short sale report dated 17 January 2024.
A short-seller report is made when a well-known investor who bets that a stock will go down in value shares a report about which stocks they think will go down next. After such a report comes out, the stock price tends to rise steeply or fall sharply.
The response claims an economic incentive for the report's author to negatively influence LuxUrban's stock price.
In its official response, LuxUrban dismisses the report, stating that it demonstrates a lack of understanding of the company's operations and the industry.
The company argues that the report relies on unsubstantiated claims from anonymous sources, repeats outdated information and leans heavily on speculation and mischaracterisation.
LuxUrban believes the report is an attempt to create misinformation to obscure its ongoing value-creating initiatives and manipulate its stock price for the benefit of the short seller.
Addressing key points
LuxUrban addresses what it describes as one of the report's "inaccuracies", affirming that it is set to welcome guests at The Royalton by LuxUrban, Trademark Collection by Wyndham, on or before 30 January 2024.
The company also notes a scheduled possession date agreement with the property's ownership.
The company asserts its compliance with US Securities and Exchange Commission regulations, emphasising that litigation involving LuxUrban is considered ordinary course and immaterial.
It also notes that all litigation risks and liabilities related to its legacy apartment rental business have been accounted for in its financial statements.
LuxUrban defends its relationships with landlords, citing additional deal flow and multiple transactions as evidence of positive partnerships.
The company also highlights its transparent approach to calculating revenue per available room, including components such as ancillary revenue, fees and expenses. LuxUrban contends that this methodology aligns with industry standards.
Company's position and future outlook
LuxUrban expresses exception to the commentary on its independent auditor, Grassi & Co, CPAs, PC, and maintains a positive outlook on its growth and operating strategies.
The company reiterates its net rental revenue and earnings before interest, taxes, depreciation and amortisation guidance for 2023 and 2024, attributing expected increases to factors such as the support provided by Wyndham Hotels & Resorts.
The company pledges to continue assessing the report, evaluating legal remedies for any misinformation, and appreciates the support of its stakeholders.
LuxUrban remains confident in the responsible and conservative posture it has adopted regarding guidance, believing it to be in the best interests of its shareholders.
