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Saturday, May 28, 2022

Why did EBON Stock plummet today?

Ebang International Holdings (NASDAQ: EBON) fell by -17.62% along with many other high-flying stocks and the current price is at $5.89 as of this writing. The stock previously closed on Thursday at $7.15.

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Ebang International Holdings (EBON) is an IT-based company which manufactures integrative ASIC chip circuit designs. Its headquarters is in China where it also manufactures Bitcoin Mining Machines.

Current Stock movement

The volume of stock that exchanged hands during the last trading session was 17,093,690 which is a 1.17% increase from the average trade volume of 14.53 million. This shows that there was a lot of selling pressure in the market for the stock as the price plummeted. The stock was considered a loser in the previous-day session as well where it fell to $6.09 which was a 14.83% decrease in its prices. However this was not always the case since at the start of this month, the stock up was up 31% in 20-days trading period.

Is there a fear of stock market bubble?

So what really prompted the change in the prices? There is a rising fear on Wall Street since the last 2 months, based on a low-key hysteria in certain sectors and industry that are down. This is because there is a speculation of a stock market bubble that is rising and may burst alongside the selling of stocks by good and bad companies alike. Even though it was pointed out by JPMorgan top strategists in a virtual conference, that admittedly some sectors are seeing small bubbles but a real stock market bubble is highly unlikely. Instead, it is the fear of the bubble that is causing this sell-out.

No news on fundamentals but EBON stock can foresee bullishness

So particularly there is no disruption or news regarding the fundamentals of Ebang International Holdings (EBON)’s business operations and performance but one possible reason could be that in March, the company diluted the shareholder value of its stock by registering 13.6 million new shares of its common stocks. Eband warranted certain investors to exercise their right of selling their shares at a price of $11.06 each. The Company can get an estimate of $150 million in gross proceeds if certain investors exercise their rights. This dilution has given investors all the more reason to sell the shares on Ebang International Holdings (EBON) on a day of the slump in the market.

The IT chip producing company is in a way however indicating that it is foreseeing possible bullishness in the future because now it is warranting an $11.06 selling rights compared to the previously $5.25 price per share. This significant jump of its share price warranty suggests the company is confident in foreseeing its stock move upwards in the future.

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