Landbridge: A Related Party Dance, with a Circular Shuffle – Gotham City Research

Gotham City Research's Opinions

• We believe 16%-55% of LB revenues are artificially boosted by related parties, so that insiders can sell LandBridge Co LLC (NYSE:LB) stock.
• We believe false and/or misleading claims have boosted the stock since its IPO on June 28, 2024.
• We estimate shares are worth no more $5 to $24 per share implying 53-89% downside to the current share price.

Summary Of The Bases Of Opinions

• We estimate that 16%-55% of 2024 revenue is suspect, not consistent with arms-length, recurring, or market activity.
• The $8 million Data center related party deposit was recognized as revenue upon receipt of the deposit. We don’t see evidence that the revenue was earned.
• LB’s reported per barrel produced water royalty fee, exceeds best-in-class TPL’s fee by 2x. We find this suspect.
• David Capobianco claimed in June 2024 “WaterBridge only makes up about 17% of LandBridge revenues” yet LB revenue from related parties was actually 32% for 2024.
• 2 out of 3 audit committee members oversaw their prior companies undergo related party and/or accounting problems, involving prison time and bankruptcy.
• Unlike your typical US-listed companies, LB’s auditor Deloitte did not audit its internal control over financial reporting, due to a temporary loophole LB is exploiting.
• Longtime LB/WB CFO and CO-CEO, Steven Jones, resigned shortly after LB’s IPO, without any evident explanation.
• Other than LB, NEHC is the only other company touting Permian data center “deals”. NEHC is a $13 million market cap and shares are -90% YTD despite touting its DC deal.
• Powered Land was incorporated in Delaware on November 6 - the same day LB announced it had a DC deal with it.
• Powered Land’s website is unmaintained, and looks like it was made in minutes, enhancing our suspicion this was a bogus transaction.
• In April, the PUCT approved the Howard-Solstice 765 kV transmission line. We believe this line undermines the electricity component of the LB data center bull thesis.
• Both Microsoft and OpenAI are looking to cool gigawatt data centers with closed loop cooling systems. We believe this technology limits LB’s DC monetization potential.
• A former TPL employee doesn’t believe gigawatt Data Centers are coming to the Permian. If they do, he believes LB stands to make just a few million in land lease revenues.
• Recent RRC guideline changes, effective June 1 2025, will pressure LB’s revenue growth, per our assessment.

Introduction

Gotham City Research first heard about Landbridge last year, as the company entered the US public equity markets as an “emerging growth company”, i.e. JOBS Act IPO. Many low quality companies have historically entered the public markets as JOBS Act IPOs. We decided to monitor LB closely, as we suspected it too is a low quality company. We found that we could not trust the company or its promoters’ representations about matters in LB’s past nor present:

• A June 28 2024 interview with Hart Energy cites David Capobianco, LB Chairman, as saying Landbridge “has a land-lease agreement with a data center developer”.

• In fact, LB had a land-lease agreement in November 6, 2024 with Powered Land, a related party. Registered in Delaware the same day, PoweredLand’s website is barely functional.
• In the same interview, Capobianco claims “WaterBridge only makes up about 17% of LandBridge revenues.” In fact, 32% of LB’s 2024 revenues came from related parties.
• On that day, June 28, 2024 (the day LB IPO-ed) - the same day that Capobianco made these false and/or misleading statements - we estimate that he and other insiders de facto sold $170.9 million of stock.
• “David Capobianco, owns more than 100 million shares. Management is locked in. They win if we win.”7 neither DNC nor Five Point own 100 million shares. DNC and insiders don’t seem locked in as they have been steady sellers since LB’s IPO day.

Based on this concerning fact pattern, we had a few questions: (1) Why did Capobianco claim that WaterBridge only makes up about 17% of Landbridge revenues? and (2) is LB and its promoters truthful about its future? Data centers, after all, appears to be a big part of the LB bull thesis. After looking for answers, we discovered what we believe are a few smoking guns:

• Upon a careful examination of LB’s 2024 revenues and related party transactions, we found 16%-55% of Landbridge’s 2024 revenue suspect.
• For example, the $8 million data center deposit, related to a multi-year deal that was announced in November 2024, was paid in December 2024, but then instantly recognized as revenue. We are doubtful that LB earned the revenue in such a short period of time.

LB bulls promote the company as a data center play. We see it as a related party scheme, with a circular flow of funds: WB and other related parties inject LB with funds, these funds boost LB’s financial results which inflates LB stock, and related parties monetize by selling stock. We estimate that this circular flow of money has been highly remunerative:

In theory this can persist indefinitely, but we believe the incentives to do so are diminishing. We believe LB shares are worth no more than $5 to $24 per share, and will remain uninvestable until the share price is significantly lower and there are serious structural changes to shareholder rights and corporate governance.

Is LB a circular related party scheme?

The LB stock pump: fuelled by false and/or misleading claims and riding the coattails of TPL

Landbridge Company LLC (“LB”), was formed in September 2023, less than a year before its IPO. LB was/is a part of Waterbridge (“WB”). Formed in late 2015/early 2016, WB is a rollup of wastewater treatment providers. WB/LB share the same: management team, Chairman David Capobianco (“DNC”) and majority owner, Five Point.

WB attempted to go public in 2018. This did not work out. Perhaps upon seeing its peer, Texas Pacific Land’s (“TPL”) stock flourishing from a change in its corporate form in January 2021, perhaps WB considered emulating TPL’s approach, thus forming LB’s accounting predecessor in September 2021.

Either by luck or design, the approach finally paid off: Five Point/DNC succeeded in gezing its Waterbridge investment’s spinoff, Landbridge (“LB”), entry into the US stock market on June 28, 2024. LB’s IPO debut occurred around the same time that the animal spirits were strong in TPL (up 50% YTD as of then). TPL share prices went parabolic for the remainder of the year, and LB’s stock price did too:

Gotham City Research believes LB stock price has been fuelled by two factors:

• Following the strength in TPL shares (TPL share strength, we believe, was largely fuelled by index inclusion last year), and promotion of the shares as the next TPL.
• False or misleading claims about LB, perpetuated by the Company and its promoters.

To give you a simple illustration: in this widely distributed LB piece LandBridge LLC: Asymmetric Gold in the Permian Dirt, dated April 30, 2025, the LB stock promoter claims LB market cap is “sizing at just under $2 billion in market cap” while touting LB as the next TPL:

In fact, LB market cap was closer to $5-$6 billion, not $2 billion, as of the date of that article. And this is not a one-off example: we see a pattern of behavior, among both the company and institutional promoters, as well as substack/seeking alpha LB promoters. We dedicate the remainder of this report to explain the materially false or misleading claims we see. But first, in this section, we will explain why we see LB as an elaborate pump and dump scheme, made possible by suspicious transactions and misleading information. We will focus on dismantling two dubious statements to explain why:

• “David Capobianco, owns more than 100 million shares”
• “WaterBridge only makes up about 17% of LandBridge revenues.” – David Capobianco

Read the full report here by Gotham City Research