Shares of bioplastics company Danimer Scientific (DNMR) are falling after Spruce Point Capital Management issued a short report on the name.

Danimer is an "inconsistent, ever-changing story that will likely fail to deliver on its promises," Spruce Point wrote in a research report. The firm found evidence that Pepsi (PEP) recently sold its equity stake in Danimer and notes that top Pepsi and Nestle (NSRGY) executives with close relationships to Danimer recently resigned. Spruce Point believes Danimer's current valuation is "highly elevated and unsustainable from the SPAC euphoria and investor appetite for environmentally friendly investing plays."

The firm says the shares have 50% downside to $12.50 per share, which it notes represents a multiple at the higher end of chemical/plastics peers. Spruce Point believes a "realistic valuation in line with more relevant chemical and plastic peers' multiples and margin profiles" reflects a price target of $8.75, representing 65% downside. It adds, "In the past, Danimer has faced financial distress and required a restructuring. If history were to repeat and it lost access to capital, its shares could be worthless."

Shares of Danimer Scientific are down 4% to $24.11 following the short report.