Shares of National Beverage plunged as much as 15 percent on Wednesday after Glaucus Research revealed a short position in the company.
The short selling firm valued the parent company of LaCroix sparkling water at $16.15 per share, more than 65 percent below the stock's Tuesday closing price of $46.48.
Glaucus' note alleges that National Beverage "manipulates its reported earnings" as its "reported financial performance is inexplicable."
Later on Wednesday, National Beverage issued a statement calling the report "false and defamatory." The stock recovered its losses and ended the day down 8 percent.
"We believe that this 'report' was intended to severely manipulate our stock price downward in support of short sellers, whose short position has dramatically increased over recent weeks," the company said.
"The allegations in this 'report' are untrue and are based on allegations made in a complaint for the purpose of extorting money from the company. That action was dismissed as being without foundation and the complaint was found to be based on lies. Having failed in that effort, the plaintiff and others associated with him, in violation of both confidentiality agreements and court orders, shared his false allegations with short sellers and their co-conspirators," National Beverage said.
The company concluded by cautioning investors against "reacting to the false statements being made." National Beverage said its "financial statements have been and are routinely audited" and that it stands behind the integrity of its financial reports and SEC filings.
Glaucus said "suspicious details abound" and that National Beverage reminds Glaucus of pharmaceutical company Valeant Pharmaceuticals. Valeant, formerly a Wall Street darling, saw its stock price reduced to a fraction of its previous levels on the back of questions about the Valeant's relationship with specialty pharmacy Philidor RX Services.
Glaucus said the LaCroix brand is "responsible for over 100% of FIZZ's growth" and is "undoubtedly" the "jewel" in the company's portfolio.
Even with Wednesday's declines, the stock has gained more than 44 percent in the past year.