Trading was halted at least eight more times during the course of the trading session as the stock extended its losses to 95%, before eventually ending the session at $1.65.
“These unsubstantiated rumors match a familiar pattern in which overseas stock scammers promote tightly held U.S.-listed Chinese companies on the basis of spurious M&A rumors, only for them to later experience sudden intraday stock collapses, often falling 90% or more,” Edwin Dorsey, the report’s author, wrote.
That fall took the stock’s market capitalisation to $40.8 million, from the $765 million that it commanded as of Monday’s closing.The report from Bear Cave stated that US regulators should stop trading in the stock as it appears overseas groups could be manipulating the price, which puts it at a “near-term risk, a severe-stock collapse.”
Bear Cave also alleged that scammers used false rumours that Gilead Sciences Inc. will acquire Pheton, or agree to partner with it as soon as August 6, to boost the stock price.
On a year-to-date basis, Pheton’s shares surged as much as 600%. A spokesperson for Gilead declined to comment on the report, saying that “it’s our practice not to comment on market rumors or speculation.”
This is not the first such instance of a Chinese company listed in the US witnessing such a sharp fall intraday. Ruanyun Edai Technology Inc., which listed in April, shed 91% on July 14, China Liberal Education Holdings Ltd. shares shed 98% in one day in January, while Park Ha Biological Technology Co., a skincare product developer had declined 93% on July 8.
(With Inputs From Agencies.)
