Danks claims that many of the complaints were bogus, generated by the shorts to beat down the stock. However, that's tough to prove. "When a company blames anything on short-sellers, it's a sure sign to short the company," says Cuban, who did it once, and if the stock goes up, he'll short it again, he says.
The 2005 Texas suit was settled last year, with Imergent admitting no wrongdoing. As part of the settlement, Imergent agreed to establish a $400,000 fund used to reimburse disgruntled customers.
Despite the barrage of criticism, the stock has recovered. On Tuesday, shares jumped nearly 7% to close at $18.89 after the company announced that it had formed a new sales team, its ninth. Also boosting the stock was a sharp short-squeeze, says Dylan Wetherill, founder of ShortSqueeze.com.
What expectations does Wall Street have for this stock? It's hard to know, since only one analyst who follows Imergent, Michael Shonstrom at Emerging Growth Equities, rates the stock a buy.