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Verint Systems Puts Pop After Scathing Spruce Point Report

Karee Venema

Verint Systems Inc. (NASDAQ:VRNT) stock is spiraling today -- down 8% at $56.25, pacing toward its worst day since Dec. 8, 2016, when it shed 10%. This follows a scathing report from Spruce Point Capital, which labeled the analytics stock with a "strong sell" opinion and said it sees 60%-70% downside for the shares.

In its report, the investment firm that focuses on short selling accused Verint Systems of "making up for slow growth with aggressive M&A and dubious accounting," and highlighted a "disregard for shareholders concerns." Spruce Point also expressed concern over VRNT's "atrocious governance," especially in regard to its proxy fight with Neuberger Berman, which has raised "significant red flags."

Heading into today's trading, VRNT stock was up more than 44% year-to-date, consolidating atop the round $60 mark in the wake of its April 15 three-year high of $63.94. This plunge has the shares on track for their lowest close since a late-March bull gap, and their first settlement south of the 80-day moving average since mid-January.

verint systems stock price chart on may 23

Options traders are bracing for even more downside for Verint Systems stock. At last check, roughly 1,350 VRNT puts were on the tape -- roughly 22 times what's typically seen at this point in the session, and 15 times the number of calls trading. Traders may be buying to open the June 50 put, expecting the equity to breach the round $50 mark over the next few weeks.

Skepticism has been growing outside of the options pits, too. Short interest on VRNT jumped 19% in the most recent reporting period to a record 3.63 million shares, or 5.7% of the stock's available float. A continued round of short selling could exacerbate headwinds on Verint Systems.