Shares of Ideanomics (IDEX -6.78%) are getting demolished today, down by 45% as of noon EDT on Friday, after two short-sellers accused the company of fraud. Hindenburg Research and J Capital Research have released research reports detailing the allegations.
Hindenburg alleges that Ideanomics has a history of changing business models in order to pump up the stock price, suggesting that the recent pivot to electric vehicles (EVs) is just the latest example. Ideanomics used to be a video content company that expanded into blockchain-based financial tech before switching to EVs last year. The company has also dabbled in commodities and cryptocurrency trading.
Hindenburg posted purported evidence for its claims in a lengthy thread on social media:
We are short $IDEX and believe it is heading near its March lows of $0.30 if it somehow avoids a regulatory halt that could see its shares go lower.$IDEX has a history of changing biz models and pumping-then dumping-each new endeavor. Its move into EVs will be no different— Hindenburg Research (@HindenburgRes) June 25, 2020
J Capital Research argues that the company is worth $0. "The company changes its name and promotional story so frequently that it's hard to keep up," according to its report.
Ideanomics has issued a statement refuting the reports, accusing the investors of an "apparently coordinated attack on the company's credibility." The company denies that it is running out of cash and says it has enough cash on hand to fund operations for at least 12 months.
Some of the allegations suggested that its EV hub and sales center in China was being misrepresented. Ideanomics issued a separate release clarifying the status of this facility in an attempt to address those accusations.