Chinese drone taxi company that flew in Seoul… Half the stock price on “fake contract”

A short selling report was published on the 16th (local time) stating that Ehang, which was attracting attention as China’s leading urban air mobility (UAM) technology company, recently hit the stock price due to lack of technology and fake contracts. Lee Hang’s share price, which was over $120 in the US NASDAQ market, plunged more than 62% after the report was issued, closing at $46.30. With the outlook that it will become the second Louising Coffee, Nicolas crisis, domestic investors are also concerned about losses.

On the same day, Wolfpack Research, a global investment information company, published a 33-page short selling report titled,’The stock price surge of Lee Hang heading for a crash’. Wolfpack Research is a place that raised suspicion that iQiyi, called the Chinese version of Netflix, inflated users and sales. Wolfpack Research’s report led to an investigation by the US Securities and Exchange Commission (SEC).

Wolfpack Research’s report on this transfer was prepared after personal visits to the headquarters, factories and companies that signed a contract with Leehang. Wolfpack Research said, “Leehang’s recent share price rise is a sophisticated manipulation based on a fake sales contract with a customer who appears to be more interested in boosting Binang’s stock price than actually buying the product.” I concluded that it was fake.

Kunxiang signed a huge contract with Lee Hang. Kunxiang signed a UAV purchase contract worth 500 billion won from Lee Hang, but Wolfpack Research insisted that Kunxiang was established 9 days before signing such a contract. Wolffac Research concluded that the address written on Kunshang’s website is either a hotel that is not related to Kunshang, or that the address on the 13th floor of an 11-story building has no substance.

Wolfpack Research believes that even at the headquarters of Lee Hang in Guangzhou, China, the face of the representative’drone taxi’ company could not be confirmed. The main content of the report is that the Guangzhou headquarters that I actually visited did not have the minimum security facilities, and the basic assembly line for drone taxi production, as well as the facilities, seemed insufficient.

If the large sales contract announced by Lee Hang turns out to be false as the report alleges, the stock price collapse is inevitable. Lee Hang’s share price was around $21 on January 4, the first trading day of this year, but jumped 6 times this year alone, hitting $122 just before the report was published. When problems such as lack of technology and production facilities and fake contracts arise, investors are concerned about huge losses.

In November of last year, the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government held a flight demonstration event for the’K-Drone Control System’ in Yeouido. Lee Hang’s two-seater class aircraft (EH216) participated in this event and flew over the Han River with a rice kiln.

Lee Hang’s drone taxi is also known among domestic investors, and damage from domestic ant investors who have actively invested directly in the US market since last year is also expected. According to the stock information portal’SEIBro’, the amount of binary stocks held by domestic investors is $549 million (approximately 600 billion won), ranking 9th among US stocks.

Reporter Oh Wonseok [email protected]