Pheton Holdings Ltd., a Chinese healthcare company listed on Nasdaq under the ticker PTHL, saw its stock crash more than 90% in a single day on Tuesday, July 29. The massive sell-off came after a research report by Bear Cave raised serious concerns about the company being part of a pump-and-dump scheme.
What Happened?
On Monday, Pheton’s shares closed at $30.96. The next day, they opened slightly higher at $31.25. However, just after 12:26 PM New York time, the stock suddenly dropped 11%, triggering a volatility halt.
When trading resumed 90 minutes later, the losses deepened to 90%, and the stock was halted again. Throughout the afternoon, the stock was halted at least eight more times as the sell-off worsened. By the end of the trading day, the stock closed at $1.65.
Market Value Wiped Out
This sharp decline reduced Pheton’s market capitalisation from around $765 million on Monday to just $40.8 million by the close on Tuesday. At one point before the crash, the company’s shares had surged more than 600% year-to-date, driven by online speculation.
Bear Cave’s Allegations
The dramatic collapse followed a research report published by Bear Cave just after 8:00 AM ET on Tuesday. The report claimed that overseas groups were manipulating Pheton’s stock price using false acquisition rumors. Specifically, it alleged that scammers were spreading fake news that Gilead Sciences might acquire or partner with Pheton by August 6.
The report stated that such rumors followed a familiar pattern often seen with US-listed Chinese companies. These companies see a sharp price rise based on fake merger-and-acquisition (M&A) stories and then suddenly collapse once the truth comes out.
No Official Response
Pheton Holdings has not yet responded to these allegations. Bloomberg News reported that the company did not reply to requests for comment. A Gilead Sciences spokesperson also declined to comment, stating the company does not respond to market speculation.
Key Takeaways
Pheton Holdings’ stock plunged from $31.25 to $1.65 in a single trading session.
Market value dropped from $765 million to $40.8 million.
Bear Cave accused overseas groups of manipulating the stock using false takeover rumors.
Trading was halted multiple times due to extreme volatility.
The company has not provided any clarification or statement so far.
This event is a stark reminder of the risks involved in speculative trading and the importance of verifying news before investing in stocks, especially in companies with low transparency or limited public disclosures.
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