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Why Shares of Diginex Are Plunging Today

By Bram Berkowitz - Updated Apr 19, 2021 at 1:05PM

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The firm reported record volume on its trading platform, but is likely seeing a sell-off after a recent short report.

What happened

Shares of the Hong Kong-based digital financial services company Diginex (NASDAQ:EQOS) had fallen more than 20% as of 12:40 p.m. today after it reported record volume on its trading platforms. 

So what

Diginex shares fell after the company today announced record trading volume of more than $1 billion in the month of April. Average daily volumes during April grew more than 300% compared to average daily volumes in March.

The company attributed the volume increase to its EQUOS cryptocurrency exchange, which launched its first digital token called EQUOS Origin on April 8. Since the launch of that token, EQUOS has recorded more than $100 million in daily volume.

Line with arrow moving downward.

Image source: Getty Images.

Despite the seemingly positive news, shares likely fell because the firm Iceberg Research recently issued a short report on Diginex. The report cited corporate "red flags" and an unreliable transaction history. The report also claimed that Miles Pelham, the founder of Diginex, has sold all of his shares.

Now what

The discrepancy between the record trading volume and short report makes the company a little hard to read right now. I would certainly invest with caution and thoroughly investigate all of Iceberg's claims before purchasing the stock.

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