• Shares sank up to 14% after Block spoke in London Thursday
  • Block says cyber-security company's pricing power is eroding

Short-seller Carson Block said he’s betting against Proofpoint Inc., sending the software company’s shares plunging, because its pricing power is eroding and the firm "fudges" its growth.

The cyber-security company’s "organic growth is a lot less than the market thinks,” Block, the founder of research firm Muddy Waters LLC, said at the Sohn investment conference in London Thursday. Proofpoint is not sufficiently adapting to competition from other companies and its "growth rate is at real risk," he said. 

"We do not comment on research reports," a spokeswoman for the Sunnyvale, California-based company said by e-mail. Block said he is short Proofpoint, meaning he has sold borrowed shares hoping to buy them back at lower prices and pocket the difference as profit.

Proofpoint fell as much as 14.3 percent on Thursday, its largest intraday decline since listing in 2012, and closed at $69.78 in New York.

Block, a lawyer and New York native renowned for bearish calls driving down the shares of his targets, founded Muddy Waters in 2010 in Shanghai and focused on exposing fraud.  Block has said he stopped trying to bet against Chinese companies this year after government agents hindered his analysts and harassed workers at a storage company he owns in Shanghai.

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