Shares of FingerMotion (NASDAQ:FNGR) are in full focus after the company announced that it had retained Mark R. Basile and his law firm, The Basile Law Firm P.C., in order to investigate activity in relation to the recent performance of FNGR stock. This is quite an interesting endeavor, as shares of FingerMotion are up by about 120% this year. In the past six months, the stock is up by over 325%. FingerMotion stated that it would take any course of legal action in order to protect its shareholders from “potential market participants utilizing unlawful means.” This includes a short report published by Capybara Research on Oct. 3.
“We are pleased to welcome Mr. Basile to our legal team,” said CEO Martin Shen. “Mr. Basile and his firm understands how dilution funding and certain market participant activities negatively affect retail shareholders and will be leading this investigation and any appropriate actions we may pursue.”
FNGR Stock: FingerMotion Retains The Basile Law Firm P.C.
On Oct. 4, FingerMotion issued a press release in response to Capybara’s short report, noting that it contained numerous errors, inaccurate assumptions, and speculation. The telecommunication company also disclosed that its management and board of directors would review the “allegations and misinformation therein” and respond appropriately.
Capybara’s short report alleged FingerMotion of stock promotions, shareholder dilution, and accounting tricks in order to convey significant revenue growth, among other claims. FingerMotion has already directly responded to the allegations of dilution by stating that its recent $300 million shelf offering only contained $25 million of an at-the-market (ATM) offering.
“The Company is aware that any fund raising at current levels would be entirely too dilutive to the shareholders and the Form S-3 is in place to enable thoughtful access to capital should the need arise,” said FingerMotion.
Capybara also wrote that FingerMotion has deteriorating financial metrics, such as an increased cash burn and “eroding gross margins.” The short seller believes that a stock promotion campaign targeting retail investors on social media is concurrent with the recent 350% increase in FNGR. Capybara also called out insiders for selling shares recently and disclosed that it had a short position in the company.
On the date of publication, Eddie Pan 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.
