On February 16, 2021, analyst Spruce Point Capital Management published a report concluding that Leidos had “wasted” $1 billion on its May 2020 acquisition of the Security Detection and Automation business of L3 Harris Technologies. The Spruce Point report further alleged that Leidos is “potentially covering up at least $100m of fictitious sales, mischaracterizing $355 - $367m of international revenue,” and that Leidos is “concealing numerous product defects from investors, including faulty explosive detection systems at airports, ports and borders.” The Spruce Point report further alleged that Leidos’ management may be intentionally inflating certain of Leidos’ financial metrics to obscure strains from investors. Following publication of the Spruce Point report, Leidos’ stock price fell sharply.
Then before the markets opened on February 23, 2021, Leidos published a press release announcing its fourth quarter and full year 2020 financial results. Shares immediately plummeted, and are presently down approximately 10% in intraday trading.