Shares of Loop Industries Inc LOOP were falling Wednesday after the maker of sustainable plastic products confirmed that Coca-Cola Co KO terminated a multiyear contract.
What Happened: Coca-Cola Cross Enterprise Procurement Group notified Loop Industries because it "did not satisfy its first production milestone" as part of a joint venture established in July. The Coca-Cola unit did state it would be open to exploring a new agreement with Loop for the North American and/or European markets.
Loop and Coca-Cola first entered into a relationship in 2018, when Loop was tasked with supplying 100% recycled and sustainable plastic.
Related Link: BofA Breaks Down Coca-Cola's Q3
Why It's Important: Loop made headlines in early October when the company was the subject of a Hindenburg short report.
Hindenburg alleges Loop is nothing but a "smoke and mirrors" company that has no "viable technology." The report cited former employees who claim the company operates two labs.
The first lab is reserved for the company's two scientists with no post-graduate experience in chemistry, with a separate lab for other employees, the short report said.
The separate lab for "rank-and-file employees was unable to replicate the supposedly breakthrough results," Hindenburg said.
What's Next: Short sellers may be taking a victory lap on Wednesday, but it remains to be seen if Hindenburg's 100% downside scenario for Loop will play out.
LOOP Price Action: Loop shares were down 8.15% at $6.14 at last check Wednesday.
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