What happened

Chinese online used-car dealer Uxin's (UXIN -4.87%) volatile week continued on Thursday, with shares up more than 11% as the market continues to digest, and at least for now dismiss, a critical short-seller report that temporarily sent shares crashing.

So what

Shares of Uxin lost more than half of their value midday Tuesday after J Capital Research analyst Anne Stevenson-Yang issued a report claiming that Uxin has exaggerated the volume of auto sales it processes by as much as 40%, and that founder and CEO Kun Dai was making false statements about the business' strength while taking cash out of the business. Stevenson-Yang urged investors to "race for the exits," claiming "Uxin is so dishonest that we would not know how to attach a valuation."

A car dealer hands over a key.

Image source: Getty Images.

Uxin responded a day later, saying the report "contains errors of facts, misleading speculations and malicious interpretations of events." Uxin said it "firmly denies the baseless allegations that it has falsified any sales data," and said founder Dai has "never voluntarily sold any shares in Uxin as alleged in the report."

The response helped Uxin shares to recover much of what they lost on Wednesday. The continued rally on Thursday leaves the shares about breakeven for the week heading into the market's close.

UXIN Price Chart

UXIN Price data by YCharts

Now what

Given the lack of certainty surrounding both the bull and bear cases for Uxin, it seems fitting the shares are flat for the week despite the drama. There's very little concrete evidence to back up the allegations contained in the J Capital report, but then again, Chinese company financials tend to be opaque enough that it is difficult to either provide proof of malfeasance or to say definitively it doesn't exist.

This is unlikely the last Uxin shareholders will hear from J Capital or other critics of the company. Based on all of the available information, I see no reason not to include a small, speculative position in Uxin in your portfolio. Just be sure to buckle up and expect a bumpy ride.