The Fundrise Innovation Fund, LLC saw its shares collapse Thursday. The stock fell 49.21% following a series of critical posts from activist short seller Andrew Left’s Citron Research.

Citron Questions “Simple Math” and Asset Value

Citron Research said on X, that it is short VCX, arguing the stock’s valuation is disconnected from its underlying assets, adding, “Simple math.”

The report compared the situation to Destiny Tech100 Inc. ( DXYZ ) . Citron noted that DXYZ saw its 1,400% premium collapse despite its underlying portfolio performing well. Left warned that “gravity is not a theory” regarding the current VCX valuation.

Regulatory History and Marketing Spend Under Fire

The short report also focused on the fund’s sponsor, Fundrise Advisors LLC. Citron cited a 2023 U.S. Securities and Exchange Commission (SEC) settlement where the firm paid $250,000.

The SEC found Fundrise “willfully” violated securities laws by paying over 200 influencers to promote products without disclosure.

Citron raised questions about the fund’s current marketing. The firm pointed to a “0.42%” marketing expense in the prospectus.

This totals roughly $3 million annually. Citron asked the SEC to investigate if these funds are paying for current undisclosed promotions.

Portfolio Exposure and Recent Activity

The Fundrise Innovation Fund ( VCX ) holds stakes in private unicorns, according to its website. Its top holdings include Anthropic at 20.7% and Databricks at 17.7%. It also holds OpenAI and SpaceX.

On Monday, VCX announced an investment in Erebor Bank. Founded by Palmer Luckey, Erebor is a chartered national bank serving tech startups. It aims to fill the gap left by Silicon Valley Bank.

Lockup Expiration Looms for Investors

Citron warned of future selling pressure for the retail-heavy fund. The firm noted that 100,000 investors are currently locked up. These shareholders cannot sell until September.

“When that lockup expires, they will all be looking at the same exit at the same time,” Citron stated in the report.

VCX Stock Price Activity: Fundrise Innovation Fund ( VCX ) shares were down 49.21% at $193 at the time of publication on Thursday, according to Benzinga Pro data.