Today has been a rather rocky one in the markets. But for investors in Electric Last Mile Solutions (NASDAQ:ELMS) it has been especially grim. Currently, ELMS stock is down more than 50% from yesterday’s close on very heavy volume.
Unfortunately for Electric Last Mile Solutions, this move is a continuation of a longer-term bearish trend in the stock. The company’s focus on becoming a leader in commercial electric vehicle (EV) solutions certainly gained it a significant amount of attention last year. However, with valuations in the EV sector coming down considerably, it’s perhaps unsurprising to see this downtrend continue.
That said, a drop of 50% is notable. This also happens to be the second such drop in two months. ELMS stock also sank significantly back in early February following a FuzzyPanda short report.
Let’s dive into what investors are watching with this EV stock today.
ELMS Stock Sinks on SEC Probe
What’s causing the drop in ELMS stock today? Well, Electric Last Mile Solutions recently disclosed that the company is being probed by the U.S. Securities and Exchange Commission (SEC).
The company reportedly just learned about this investigation last week. However, it also recently engaged in an internal probe over “improper stock purchases” that took place, resulting in the resignations of its chairman and CEO. It appears this new probe is tied to the previous internal audit.
Like other de-SPAC companies, Electric Last Mile Solutions has been hit by a bout of negative market sentiment. But the attention it has gained from short sellers and others alleging improper activity has forced the SEC to investigate further.
This situation is certainly not welcome for investors, particularly given that ELMS announced it may soon need more cash. The company has enough cash to continue operations through as late as September, but it appears that more capital will be needed to launch its upcoming Urban Delivery and Urban Utility models.
Accordingly, a multitude of factors are at play for ELMS stock right now. Investors looking for beaten-up short squeezes appear to be looking elsewhere as short sellers take the “W” today.
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On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.