LongFin Corporation (NASDAQ:LFIN) stock price started crashing following the removal of its name from Russell Indexes, amid the failure to meet the minimum 5% free float requirement. The selloff intensified last week after the company posted lower than expected financial numbers for the fiscal year 2017. SEC probe due to material weaknesses in its financial controls also added to bearish sentiments.
The SEC’s Division of Enforcement has started investigation related to its IPO and acquisition of Ziddu.com. The company’s shares jumped more than 1000% in mid-December amid its announcement of Ziddu acquisition.
Source Image: finviz.com
LongFin stock currently trades around $19, down more than 66% year to date. Its stock has the 52-week trading range of $4.69 – $142.82 – with the market cap of $1.43 billion.
Short-selling firm Citron Research contributed to the selloff after they raised questions on its filing and press releases.
“If you are fortunate enough to get a borrow, indeed $LFIN is a pure stock scheme,” Andrew Left’s Citron Research said in a Monday morning tweet. “@sec enforcement should not be far behind. Filings and press releases are riddled with inaccuracies and fraud.”
Short Selling Caused the Slump
LongFin stock recovered from its yearly low of $9 a share yesterday after its CEO blamed short sellers for the steep decline in share price in the last two weeks. According to FactSet, almost 14.6 percent of Longfin’s stock available for trading is sold short.
LongFin CEO showed his concerns on short selling, and he indicates to report the matter to SEC and FINRA.
Longfin CEO and Chairman Venkat Meenavalli said, “We got information, we have a special investigation. … According to us, there are 28 million shares shorted of $1.4 billion dollars bet against me,” he said. “The guys are going to destroy us. I’m fighting here.”
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