(Adds more quotes by Block; detail on 500.com; byline)
By Luciana Lopez
Sept 10 (Reuters) - Famed U.S. short seller Carson Block, head of research firm Muddy Waters LLC, is targeting Chinese online lottery platform 500.com in his latest move to undercut what he sees as overvalued stocks.
Block, who has exposed accounting problems at a slew of Chinese companies, said the lottery company had some “red flags,” including an uncertain regulatory environment. He spoke on the sidelines of a public event on Wednesday at New York’s Baruch College on Wednesday.
“We’re short it,” Block said. “As we termed it, it’s in a legally somewhat gray area because the licensing regime is not clear, is not finalized.”
Block first said he was shorting the stock at a conference earlier in the week as well, though that conference was not public.
“When you comp it to some of its Hong Kong-listed peers, this is a much more expensive stock,” he said. “It doesn’t make a lot of sense to us at these levels.”
He raised other concerns about the stock, as well, including more potential competition in the sector and how that might affect future revenues.
500.com debuted in the United States in November and has soared about 62 percent since then. The stock fell earlier in the week after Block’s private presentation and down another 8 percent on Wednesday to trade around $33 a share.
Spurred by rising disposable income, a strong appetite for gambling and more sophisticated games, China’s lottery market has boomed with customers splurging some $23 billion in 2012, compared to $37 billion by punters in the world’s biggest lottery market in the United States.
Muddy Waters’ previous targets include U.S.-listed Chinese companies such as the now-bankrupt Sino-Forest and Longtop Financial Technologies, which gained notoriety for fraudulent reporting and asset stripping. (Reporting By Luciana Lopez; Editing by Cynthia Osterman and Tom Brown)