An independent research firm said this company's stock is worth $0 and now it's crashing

Independent research firm Gotham City Research is out with a new report on Tuesday in which it says that shares of Endurance International Group, a cloud solutions provider, are worth $0. 

Following this report, shares of Endurance were down as much as 27% on Tuesday. 

Back in July 2014, Gotham City published a report on Spanish WiFi provider Let's Gowex, calling the company a fraud in a report published July 1; Let's Gowex said it was insolvent on July 6. 

In its report on Tuesday, Gotham City said it believes "40%-100%+ of reported profits" at Endurance are "suspect," adding that the company's normalized profits will not be enough to cover its interest expenses. As a result, Gotham City believes Endurance shareholders will be wiped out. 

Gotham City doesn't explicitly say if it is short shares of Endurance, but says in a disclaimer that readers should assume the firm stand to profit "in the event the issuer's stock declines."

Harkening back to its earlier reports, which in addition to Let's Gowex include reports on companies including Sino-Forest, Quindell, and Tile Shop, Gotham City writes in Tuesday's report that Endurance has a common characteristic all these other companies shared: "material related party transactions with captive or quasi-captive entities."

This means, in plain English, that these companies' major customers or "related entities" were, in fact, controlled by the company itself. In one example, Gotham City argues that:

• Endurance CEO Hari Ravichandran and/or immediate family were and/or is a director and/or owner of related parties, Glowtouch Technologies and Innovative Business Services ("IBS").
• The transactions are material to EIGI, as the transactions have accounted for at least 16.5% of 2012-2014 EBITDA.
• EIGI's payments to Glowtouch account for the majority of Glowtouch's revenues.

We've reached out to Endurance for comment and will update this post if we here back. 

Here's the brutal chart of the decline in Endurance shares on Tuesday:

In the meantime, you can find Gotham City's full report embedded below: