In response to being on the receiving end of a short-sellers report, shares of TransEnterix (NYSEMKT:ASXC), a medical device company focused on robotic surgery, fell 18% as of 2:40 p.m. EDT on Wednesday.
A short-seller named White Diamond Research published a detailed report on why they believe TransEnterix's stock is poised for a hard fall. The crux of their argument is that the company's Senhance system will never achieve mass commercial adoption and that recent sales by insiders suggest that there could be a substantial amount of near-term downside to the shares.
Traders are responding to the news by fulfilling the prophecy and knocking down the share price.
Only time will tell whether the author of the report is right. The best move that bulls can make today is to ignore the volatility and read through the report so they can decide for themselves whether they agree with the author's view.
As for the company, the best thing that management can from here is to ignore the report altogether and remain heads-down focused on selling as many Senhance systems as they can. If they can turn Senhance into a commercial success, then the share price will take care of itself.
Having said that, my plan is to remain on the sidelines because TransEnterix is still too risky for my taste. However, I'll continue to track this company's progress with great interest.