What happened

For three happy weeks since its initial public offering, Israeli X-ray machine maker Nano-X Imaging (NNOX -7.61%) could do no wrong. The disruptive purveyor of "free" X-ray machines, which planned to make its money by sharing in the fee for service charged by its customers to their customers, saw its share price sink only three times in 14 trading days -- and closed trading on Friday up more than 250% from its IPO price.

But nothing lasts forever. Today, Nano-X shares are in free fall, down 27.8% as of 10:50 a.m. EDT, after being savaged in a short report from Citron Research this morning.  

Red stock arrow breaking up and showering down in pieces over a city below

Image source: Getty Images.

So what

Titled "A Complete Farce on the Market -- Theranos 2.0," Citron's report pulls no punches in assigning Nano-X stock, still selling for $35 as of this writing, a "$0 target" price. Nano-X is nothing but "a stock promotion," warns the analyst, and the company itself "has never published any data showing their machine's images compared to images from a standard CT scanner." For that matter, the analyst seems to doubt Nano-X even has a product, complaining that to date, it has "only seen a mockup drawing of what this machine is supposed to look like."

And as for Nano-X's recent announcements of distribution agreements for its product, Citron derides these as deals with "fake customers."

Now what

Suffice it to say that Citron's allegations are shaking investor confidence mightily this morning -- not least by taking Nano-X's own F-1 filing and turning it against the company. Quoting from this document, Citron notes that Nano-X's intellectual property was recently "estimated to be $6.1 million" in value "based on an independent valuation report."

When you consider that investors currently assign a $1.7 billion valuation to the stock, this suggests Nano-X shares may still have a long way to fall from here.