Why EHang Holdings’ stock fell 15% in one day

What happened

Aviation investors electric vehicle (aka “air taxi”) manufacturer EHang Holdings (NASDAQ: EH) have an … exciting week.

The adventure began on Tuesday, when short seller Wolfpack Research unleashed a plank at EHang, accusing the company of being “an elaborate stock promotion” that signs “bogus sales contracts for the benefit of its investment stock price”, and therefore not a real business at all.

Wednesday, EHang retaliated, accusing Wolfpack of making “many mistakes, unsubstantiated claims and misinterpretation of information,” which sparked an investor rush into his actions – but now the pendulum is swinging the other way, and Thursday at 11:00 am EST, EHang stock is down 15%.

Image source: Getty Images.

So what

What’s the big news today? Following his denial of Wolfpack’s claims yesterday, EHang today released updates on what he calls a “major production facility” and announced that he will hold an investor day on site to show off his products and prove that it is, indeed, a real business.

Calling itself “the world leader in autonomous aerial vehicle (‘AAV’) technology platforms,” ​​EHang says it is modernizing its 24,000 square meter production facility and has pledged to start producing AAVs in the second quarter of 2021. (that is to say as little in two months). The company promises to build 600 units per year, a number which it says “can be further increased to meet the growing needs of the global market.”

Now what

This is the good news. The bad news is that much of this language still seems forward-looking and speculative. EHang’s statement says nothing about the current demand for 600 air taxis. The development of its facilities is underway means that it is not yet finished. And as for Investor Day, the company says that won’t happen until “end of June 2021”.

The fact that EHang is not willing or able to show investors the property at this time, I fear, will only strengthen suspicion of short sellers that he has nothing to show.

This article represents the opinion of the writer (s), who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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