Can SOS (NYSE:SOS) turn things around? There is no denying that these last few trading days have been volatile for the emerging blockchain play. After closing lower by 20% on Friday, SOS stock is now rocketing higher 20% in pre-market trading. Dive in with InvestorPlace for all you need to know about the recent moves.
As InvestorPlace Web Editor Vivian Medithi wrote recently, SOS Limited is a tech company focusing on solutions for emergency rescue services. These include cloud rescue software products for medical rescue, car rescue and financial rescue. However, most investors likely consider SOS stock as an emerging blockchain play in China. Early in February, news the company had acquired 5,000 cryptocurrency mining machines ahead of schedule created a major rally.
Then, just last week, SOS announced that it was launching construction of a cloud crypto mining center in Hejiang County. According to the press release, SOS had entered a definitive agreement with the Leibodong Hydropower Station in Hejiang to use its electricity and physical space. Over the next three years, SOS will keep its mining rigs there, and start operating its mining and data center. For the bulls, this news was a great sign of progress. And to company executives, the deal in Leibodong is evidence it can launching mining operations with a cheap source of electricity.
However, investors did not have long to celebrate the SOS stock news.
On Friday, Hindenburg Research announced on social media that it had a short position in SOS. Another short-selling firm, Culper Research, did the same.
The two firms alleged that SOS was faking its headquarters and recent deals, and that the company faces great regulatory risk. Hindenburg also alleges that SOS copied elements of other websites and press releases.
What to Know About SOS Stock Here
There is no denying the allegations by Hindenburg and Culper sting, and they do raise concerns about SOS. As with other companies like EHang (NASDAQ:EH) and Kandi (NASDAQ:KNDI), these short repots highlight that sometimes, it is hard for retail investors to know what is up. Hindenburg says “We are short $SOS, which we believe to be an obvious China-based shell game reanimating the corpse of a former China based company that earlier imploded 90% from its highs.”
So with those biting words, why is SOS stock up on Monday morning?
It appears that bulls are responding to a statement by SOS. On Monday, the company said that the claims by short-sellers were “distorted, misleading, and unsubstantiated.” It also says that it believes that social media accounts were impersonating some of its board members. This response follows up a Chinese-language release making the rounds on subreddits devoted to SOS stock.
For investors then, it seems promising that SOS is fighting back against the allegations. This should reinvigorate the bulls, who are already taking shares up this morning. However, there great reason for caution. Hindenburg says it will be releasing a new report this week. Any further dig at SOS will cause volatility. And as always, be sure to do your own due diligence and sort through the allegations.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.