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Supplements firm backed by Mark Zuckerberg ‘pure hype’: short seller

Supplements firm backed by Mark Zuckerberg 'pure hype': short seller

A nutritional supplements company backed by an investment firm tied to Mark Zuckerberg claims to sell a revolutionary anti-aging pill — but a short seller claims the company is “pure hype.”

ChromaDex, a Los Angeles-based marketer that says it’s “dedicated to healthy aging,” sold shares in a 2017 deal that made Zuckerberg’s investment firm Iconiq its second-largest shareholder with a 1.7-million-share stake that was then valued at $7 million.

At the time, ChromaDex’s biggest investor was Li Ka-shing, a Chinese billionaire and early Facebook investor who swears by the company’s flagship product, Tru Niagen. Ka-shing invested $25 million.

Two weeks ago, ChromaDex announced it would sell Tru Niagen at thousands of Walmart locations. In report slated to be released Thursday that was exclusively obtained by The Post, the short-selling firm J Capital Research predicted the seemingly “promising” Walmart news will become the latest example of a company that the report claims hypes partnerships and then fails to deliver.

“We have come to the conclusion that the company is pure hype, dished up by an Oceans 11 of stock promoters,” J Capital analyst Anne Stevenson-Yang wrote in the report.

Chinese billionaire Li Ka-shing is another one of the top investers in ChromaDex.
Chinese billionaire Li Ka-shing is another one of the top investers in ChromaDex.
REUTERS/Tyrone Siu/Files

J Capital, which has placed a short bet against ChromaDex shares that will pay off if they fall, in 2020 alleged fraud at companies including Luckin Coffee and WireCard. Last summer, Luckin was delisted from Nasdaq after it admitted its operating chief fabricated sales numbers. WireCard, meanwhile, filed for insolvency, admitting that more than $2 billion on its balance sheet may have never existed.

Members of ChromaDex’s management have been the target of more than a dozen lawsuits by the Securities and Exchange Commission which have accused them of manipulating the stock prices of micro-cap companies with names like Opko Health, Cocrystal Pharma and Mabvax Therapeutics, according to J Capital’s report.

“Why would you trust them with CDXC?” the report added, referring to ChromaDex’s stock-ticker symbol.

ChromaDex has previously announced partnerships with big names like GNC and Nestle. But researchers at J Capital say they were unable to find Tru Niagen in a single GNC store and that the Nestle partnership generated just a few hundred thousand dollars.

A research scientist working in a ChromaDex laboratory in Longmont, Colorado.
CoA research scientist working in a ChromaDex laboratory in Longmont, Colorado.
Photo by Lewis Geyer/Digital First Media/Boulder Daily Camera via Getty Images

“CDXC promotes its single product, a health supplement, with iterative press releases that boost share price long enough for insider sales before the vaunted advantages contained in those press releases quietly disappear,” the report claims.

“There is no fraud and no effort to pump the stock,” a lawyer for ChromaDex told The Post in a statement. “Those allegations are categorically false.”

Reps for the investment firm Iconiq didn’t respond to requests for comment. In this first quarter, the firm sold approximately 410,000 shares for $12.1 million — bagging a 300-percent return on its investment, according to securities filings. Iconiq still holds 1.9 percent of ChromaDex.

The sale comes after ChromaDex received a warning letter from the Food and Drug Administration that called out false advertising that its product helped treat coronavirus, according to J Capital.

About the author

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Julia Mangels

Julia has handled various businesses throughout her career and has a deep domain knowledge. She founded Stock Market Pioneer in an attempt to bring the latest news to its readers. She is glued to the stock market most of the times and just loves being in touch with the developments in the business world.

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