The shares of the mining company Ebang by the end of trading on April 6-7 lost 14.8% in price. This is how the market reacted to the publication of a report by Hindenburg Research analysts with a recommendation to “open short” on securities.
Experts warned that the China-based firm misled investors about the allocation of investments.
The report claims that of the $ 374 million raised in four rounds after the IPO, Ebang sent $ 103 million to purchase shares of the underwriter AMTD Group with a dubious reputation. $ 21 million of these funds went to pay off loans raised by a relative of the founder of the company, Dong Hu.
The authors of the report indicated that the manufacturer’s sales fell to a minimum, and the lineup is outdated. In the first half of 2020, Ebang delivered 6,000 mining devices.
Hindenburg Research also pointed to the recently launched Ebonex platform . According to analysts, she appeared to “divert the eyes”.
Analysts called Ebang a good reminder to follow the caveat emptor rule . It obliges you to conduct proper analysis before buying stocks.
“The report contains many errors, unconfirmed speculations and inaccurate interpretations of events. The company will take all necessary and appropriate measures to protect the interests of shareholders, ”the press release says.
Recall that at the end of June 2020, Ebang revealed plans to expand its business by creating an exchange after the IPO on Nasdaq.
In February 2021, ForkLog wrote that Ebang stock did not break records, unlike competitors. Unsatisfactory financial results for the first half of the year were mentioned among the reasons .