Shares of U.S.-listed Chinese drone maker EVA plunged nearly 63 percent on Tuesday after short-selling firm Wolfpack Research issued a short-selling report saying its partners were suspected shell companies that falsified revenue and products.
Wolfpack Research, which specializes in short-selling, said in a Feb. 16 report that EVA was “a well-pulled stock” and that the company lied about its products, manufacturing, revenue and partnerships.
On the same day (Feb. 16), EVA closed down 62.7 percent to $46.30 on the Nasdaq.
Wolfpack Research said in a report that EVA had falsified sales figures and partnerships, and that the company’s shareholder, the autopilot aircraft manufacturing company KUNXI, was suspected of signing false sales contracts with EVA in order to boost its share price.
According to the report, of the three addresses listed on the company’s official website, one is a hotel, but KUNXI does not have an office there; one is an 11-floor office building, but the address marked on the official website is on the 13th floor; and the last address has only one KUNXI employee during working hours.
In addition, the registered capital of KUNXiang Intelligence is only RMB 1.4 million to RMB 10 million, and it was established 9 days before signing a sales contract with YNA for RMB 65 million to RMB 450 million. The company’s capital was too low to actually fulfill the contract. However, KUNXI still signed another RMB 4.3 million to RMB 30 million contract with YNA 4 months later. And KUNXiang Intelligence invested RMB 14 million to RMB 100 million before YNA’s IPO.
Wolfpack believes that the motive for signing these “messy” contracts with YNA was to increase the value of its shares in YNA.
YNA’s shares have soared from about $13 in early December last year to $124.09 on Friday (Feb. 12) after it priced its initial public offering (IPO) at $12.50 per share in the U.S. in December 2019.
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