Chinese flying taxi company EHang accused of “stir-frying” figures, the stock fell utterly
Investors rushed to sell off shares in China’s EHang drone development company after the startup was accused of fraudulent business data.
|EHang shares (EH code) listed on the Nasdaq stock exchange (USA) evaporated nearly 63% on the trading day of February 16. Photo: Getty Imange / AFP|
EHang shares (EH code) listed on the Nasdaq (US) “evaporated” nearly 63% in the trading session of February 16 after Wolfpack Research, a global financial research company, published a detailed report. Raising doubts about EHang’s true business performance.
The loss of EHang shares has decreased somewhat in the session on February 17th when it increased 35% compared to the previous session and closed at 62 USD. However, this price is still much lower than the peak of $ 129.80 set last week.
CNN reported that EHang has denied the report that Wolfpack Research made “a scam”. In a statement on Feb. 16, EHang said that Wolfpack Research’s assessment “contained many errors, groundless claims and misinterpreted information”.
EHang said the unit “will consider all necessary and appropriate actions to protect the interests of the company and its shareholders”.
In a 33-page report on EHang, Wolfpack Research said that the startup had developed a rather elaborate stock polishing plan, based on fabricated revenue from fake sales deals. Wolfpack accused EHang of making up lies with a slew of lies about products, production, sales, partnerships, and the possibility of regulatory approvals.
The US Securities and Exchange Commission (SEC) declined to comment.
EHang is the latest Chinese company to list on the US stock market but faces increasing scrutiny from the US authorities, after Luckin Coffee, another emerging Chinese startup. The scandal “dislodged” revenue figures. Luckin Coffee filed for bankruptcy this month in the US, less than a year after the company was kicked off the Nasdaq stock exchange.
Last year, iQIYI (stock code IQ), a service provider of streaming content (streaming), which was dubbed the “Netflix of China”, also entered the sights of Wolfpack Research. Wolfpack Research came up with major fraud allegations by iQIYI. The US Securities and Exchange Commission (SEC) then launched an investigation into iQIYI’s activities. However, the company providing the streaming service has denied the allegations and confirmed that they are cooperating with US authorities.
In October 2020, iQiyi announced that it had conducted an internal audit, but “did not find any evidence for the allegations”. The company did not comment on the situation of the investigation as of Feb. 17, while the US Securities and Exchange Commission declined to comment.
An EHang spokesperson told CNN Television on Feb. 17 that the company “strongly believes that Wolfpack Research lacks a basic understanding of its operations and business”, and will soon reject it entirely. Wolfpack Research’s allegation set.
The EHang spokesperson also reiterated that the company “is committed to maintaining the highest standards of corporate governance, as well as disclosing information transparently and in a timely manner in compliance with applicable rules and regulations. of the US Securities and Exchange Commission and the Nasdaq Stock Exchange “.
Started his business in 2014 with headquarters in Guangzhou province, China, EHang attracting the attention of investors when announcing the development of “self-flying taxis”. EHang is listed on the New York Stock Exchange in 2019.