Trustpilot rebounds after short selling assault and executive share purchase

Trustpilot shares staged a notable recovery on Friday following a turbulent period triggered by critical allegations from an American short selling firm. The consumer review platform, listed on the FTSE 250, experienced a sharp decline after Grizzly Research released a report likening Trustpilot’s operations to a “mafia style extortion racket”, causing the stock to fall by nearly 32 percent and reach an 18 month low of 129p.

Amid the volatility, chief financial officer Hanno Damm acquired 50000 shares at a cost of almost £70000. This strategic purchase occurred as Trustpilot faced a market capitalisation loss of approximately £200 million. On Friday, shares rebounded, closing up 13.3 percent at 146.5p, reversing a significant portion of the previous day’s losses.

Grizzly Research’s 26 page report, published as trading commenced, alleged that Trustpilot coerces businesses into subscriptions by generating unsolicited review profiles that attract negative feedback, pressuring companies to pay for management tools. Grizzly claimed that such practices risk eroding the integrity of reviews and undermining Trustpilot’s value proposition.

Trustpilot categorically denied the accusations, issuing a statement after markets closed that described the report as containing inaccuracies and assertions that were demonstrably false. The company argued that the claims reflected a fundamental misunderstanding of its business model and failed to consider publicly available information including its policies and enforcement measures. Trustpilot stated that allegations of manipulating reviews for profit or using unsolicited profiles as leverage were untrue. The company is considering all appropriate responses regarding the statements made by Grizzly Research.

Following the controversy, analyst Mark Hyatt at Morgan Stanley advised clients to take a positive view on Trustpilot, highlighting the absence of credible competitors and noting that consumer behaviour alone may explain the volume of negative reviews. Hyatt argued this could not be pinned directly on Trustpilot’s commercial strategy.

Trustpilot generates most of its revenue through company subscriptions. These subscriptions provide access to analytics, marketing solutions, and review management tools, while reviews remain freely available for consumers to read and publish. The company, headquartered in Copenhagen, floated on the London Stock Exchange in 2021. Grizzly Research, led by Siegfried Eggert, is based in the United States and has previously targeted several well known international businesses. It has not disclosed the scale of its short position in Trustpilot shares.