SOS Limited (NYSE: SOS) fell sharply on Friday. The stock price fell by 6.07% with the current price being at $6.50while it previously closed at $6.92.
What seems to be the cause of fall on the surface?
Up till recently, there were external market force that was believed to be behind the plunge; the price of Bitcoin and Ethereum have been down since the last 24 hours, either way high valuation stocks/high fliers like SOS were generally selling off today as the volume of stock trade today was 83,379,513 from the average trade volume of 44.84 million..
Another possible reasoning for the stocks plungehas been that the company is offering more of its stock as warrants. These warrants come in the shape of American Depositary Receipts (ARDs) are the ones available for trading in the US, and investors recently came under the pressure of selling these ADRs for $4.05 each and acquired 23.88 million. This had allowed SOS to gain $96.7 million proceeds.
The company went further on to give more additional warrants for 23.88 million more ADRs for $7 per ADR. This would have caused investors shares to dilute and now that the market force is generally pressured towards selling stocks, the investors are selling their new ADRs as well.
SOS Ltd’s mining operations shown through fake pictures?
However, now news about the company’s mining activities have started to question company’s authenticity.The tide of selling-off can most probably be set in motion by the increased amount of claims of fraudulent activity by investment research firms like HindenburgResearch and Culper Research. After which now follows an investigation into these claims by shareholder attorneys Hagens Berman.
SOS limited fought back by issuing a statement on its website regarding these claims being false accusations only to be made for the economic benefit of the short sellers. However investigative research had led to finding out that the company had posted several fake and dummy photos as well as inaccurate press releases which called out to be misrepresenting and bogus. Even the address given on the company’s website for its headquarters was found out by Hidenburg research to be location of a three-star hotel instead.
No new statement by SOS ltd to give proof against these claims
The Hidenburg Research and Culper Research claim that SOS is an elaborate “pump and dump” scheme that claimed to have bought 15,000 mining rigs on 21 January only to give doctored photos of the crypto miners. The Hagens Berman partner, Reed Kathrein is heading the investigation for what she states to be “false promotion scheme”. The SOS ADRs have dramatically fallen. Investors now most obviously fear the risk of investing in SOS stock. Many investors are of the view that SOS Ltd should respond to these allegations which has been floating around for a week, if not then many will pull-out of the stock due to fear of these allegations and investigations.