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A statement from the management of Quintis, an Australian sandalwood producer, defending itself from a scathing report from a California-based short seller has done little to stop the stock from tumbling for a second day.

Quintis had a rather busy Wednesday. Previously known as TFS Corporation, the company was in the midst of rebranding itself as a wellness company and had lined up a number of promotional events featuring brand ambassador and Australian Formula 1 driver Daniel Ricciardo in the lead-up to this weekend’s Melbourne grand prix when the short report from Glaucus Research landed.

Glaucus said it believed TFS/Quintis would likely follow two other Australian plantation companies that both went into administration in 2009 and slapped a valuation of zero on the stock.

Glaucus said TFS/Quintis resembled those other collapsed agricultural companies. “TFS does not generate significant cash from sales of its sandalwood, which for the most part has yet to be harvested” Glaucus said.

On Thursday, Quintis responded before the market open to a query from the Australian Stock Exchange, describing Glaucus’s note as “self-serving and biased” and saying there were “substantial and egregious inaccuracies littered throughout the note which could have been avoided had the note’s author contacted the company.”

The company reaffirmed its earnings guidance that cash earnings before interest, tax, depreciation and amortisation would rise by at least one quarter in the 2017 financial year from the previous year.

Shares are down 10.7 per cent in afternoon trade at A$1.17, but had dropped by as much as 19.5 per cent shortly after the stock market opened today. Yesterday, when the report was released, the stock closed 7.4 per cent lower.

As of March 17, TFS/Quintis was one of the most shorted stocks on the ASX with 14.5 per cent of its outstanding stock on issue reported as short positions, according to data from the Australia’s corporate regulator, ASIC. The company’s short ratio today was 45.1 per cent, according to Bloomberg data.

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