Datavault Refutes Wolfpack Research Report, Cites ‘Numerous False Statements’

In a strongly worded response to recent market turbulence, Datavault (DVLT) has issued a formal statement condemning what it describes as a “self-serving and malicious” short report published by Wolfpack Research targeting the artificial intelligence company and its CEO, Nathaniel Bradley.

The AI firm’s leadership has characterized the Wolfpack Research report as containing “numerous false, misleading, and defamatory statements” that were deliberately crafted to manipulate Datavault’s stock price for the financial benefit of short sellers who profit when share prices decline.

“These claims lack factual foundation and have caused reputational harm to the Company and its stockholders,” Datavault stated in its official response. The company particularly highlighted that Wolfpack Research has openly disclosed its short position in DVLT shares, which Datavault argues demonstrates that the report was motivated by financial self-interest rather than objective analysis.

Datavault CEO Nathaniel Bradley didn’t mince words in his assessment of the situation. “It’s obvious that these actors are financially benefitting from spreading false information,” Bradley said, signaling a combative stance against the short sellers.

The dispute highlights the increasingly contentious relationship between publicly traded technology companies and short-selling research firms. While short selling itself is a legitimate market practice involving betting that a stock’s price will fall, the tactics used by some short-focused research operations have drawn scrutiny and criticism in recent years.

In what could represent a significant escalation, Datavault announced it intends to pursue legal action against Wolfpack Research. “We intend to file suit to hold Wolfpack Research accountable for its malicious conduct and to protect the rights of our shareholders,” the company stated, drawing a distinction between legitimate short selling and what it considers to be market manipulation through dissemination of false information.

The company emphasized it is “evaluating Wolfpack Research’s actions and will pursue all legal remedies available under applicable law,” suggesting a potentially protracted legal battle ahead.

This confrontation occurs amid a volatile period for AI-focused technology stocks. After dramatic gains throughout much of 2023 and early 2024, many artificial intelligence companies have experienced significant share price fluctuations as investors reassess valuations and profit potential in the rapidly evolving sector.

Short sellers like Wolfpack Research have increasingly targeted companies in emerging technology fields, claiming to identify overvalued businesses or questionable practices that may not be apparent to typical investors. However, targeted companies often argue that these reports contain deliberate mischaracterizations designed to drive down stock prices.

The dispute between Datavault and Wolfpack Research underscores the high-stakes battle for market narrative control that can significantly impact investor confidence and share valuation. For smaller or mid-sized public companies like Datavault, negative research reports can have outsized effects on stock performance, regardless of their accuracy.

Legal battles between public companies and short sellers have produced mixed results historically. While some firms have successfully challenged false claims and won settlements, proving market manipulation in court presents significant challenges, and legal proceedings can extend for years.

As this situation unfolds, Datavault shareholders and market observers will be watching closely to see whether the company’s aggressive response helps stabilize its stock price and whether its threatened legal action materializes into formal proceedings against Wolfpack Research.

Neither Wolfpack Research nor its representatives have publicly responded to Datavault’s statements as of this reporting.