Shares in Chinese mining equipment maker Ebang fell 14.8% (April 6-7) after the release of a report by analysts from Hindenburg Research with a recommendation to “open a short” on the securities.
Experts say that Ebang 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. Of this amount, $ 21 million went to repay loans raised by a relative of the company’s founder.
Representatives of Hindenburg Research also write that Ebang sales have dropped to a minimum, and the lineup is outdated. In the first half of 2020, the company delivered 6,000 mining devices.
In addition, analysts believe that the recent launch of the Ebonex.io cryptocurrency exchange is news for a diver.
Analysts called Ebang a good reminder to follow the “quality at buyer’s risk” rule [caveat emptor]… It obliges you to conduct proper analysis before buying stocks.
At the same time, Ebang called the findings of Hindenburg Research unfounded:
“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. “
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