Bleecker Street Research has gone short on SmartRent with claims its “security vulnerabilities” could create massive liabilities for the company and its clients. Three months ago, Night Market Research issued a short report on the company stating it had artificially inflated its revenue.
U.S.-based SmartRent provides enterprise smart home solutions for property managers and homeowners and has a market capitalization of $570 million.
In a Friday report, Bleecker Street said the company’s former largest investor, RET Ventures, is a VC fund and that 60% of Smart’s revenue last year came from RET Ventures portfolio companies. However, it has since sold its entire stake and new orders were cited as having collapsed by 66%.
“We have learned that SmartRent’s products were optimized to be sold to RET Ventures LPs, and with this circular demand now removed, look out,” the report contended.
The short outfit also claimed that SmartRent used a Croatian supplier that had a known security vulnerability and instead of cutting ties, acquired it and changed the name of the products.
Pointing to consequences, Bleecker Street pointed to an apartment in Alexandria, Virginia where SmartRent locks were installed. “According to police reports, a man was able to access several apartments…This came after residents complained about the locks.”
Bleecker Street stated it intends to publish a subsequent report with more examples of how SmartRent’s locks have allegedly proven unsafe.
In June, Night Market Research published a report stating SmartRent had artificially inflated its revenue through a revenue recognition change likely to prove transitory.
SmartRent shares were trading down 10% at $2.77 at midday on Friday in New York.