EOS Under Pressure as Short-Seller Report Targets Major South Korea Contract

Electro Optic Systems (EOS) continued to wrestle with investor jitters after a scathing note from Grizzly Research, a US-based short-seller outfit. The analysis centers on an $80 million contract with a South Korean customer not named in the report, labeling the deal as deliberately misleading and wholly unrealistic. Grizzly argues the buyer is merely a small agricultural drone supplier, casting doubt on whether it possesses the creditworthiness to support such a volume.

EOS?s management pushed back firmly, describing the Grizzly piece as manipulative and demeaning. Legal teams in Australia and Germany are evaluating potential action against the authors. Nevertheless, the company acknowledged in its latest update that the contested order still requires clarification, noting that the expected down payment has been postponed to February or March.

Market momentum remains negative. On Thursday, EOS shares declined by 7.81% and closed at AUD 6.14. From an all-time high of 11.02 AUD in mid-January, the stock has fallen by more than 44%. Even with the recent rout, the year-to-date performance still shows a roughly 365% gain, a cushion now rapidly shrinking under current dynamics.

Beyond the immediate controversy, questions about EOS?s corporate structure are fueling further volatility. Reports suggest the company is weighing a relocation of its headquarters and its primary listing to Europe to capitalize on rising defense spending there. This potential pivot comes amid a broader global uptick in defense investment, a trend EOS would theoretically stand to benefit from operationally.

Looking ahead, investors will be focused on the probability and timing of the South Korean down payment. If funds do not materialize by March, the short-seller narrative would gain more traction and management credibility could face additional erosion.