China’s UAM technology company, Ehang, has been controversial over technology manipulation and fake contracts. Lee Hang’s stock price, which had been trading for more than $120 in the US NASDAQ market, plunged more than 60% within a day. Domestic investors are turning the arrows of criticism from the Seoul City and the Ministry of Land, Infrastructure and Transport, which brought in Lee Hang’s drone taxi last year and launched it over the Han River.
On the 16th, Wolfpack Research, a global investment information company, published a 33-page short selling report titled “Large Price of Lee Hang Heading to Fall”. In the report, Wolfpack Research argued that Lee Hang not only signed a huge fake contract, but also did not have a basic assembly line for drone taxi production. Wolfpack Research is an institution that led the investigation by the Securities and Exchange Commission (SEC) by proposing sales manipulation of’Aichii’, which was called the Chinese version of Netflix.
When the report came out, Lee Hang’s stock price plummeted. On this day, Lee Hang’s share price in the US NASDAQ market closed at $46.30, down 62.7% from the previous day. In one day, the market capitalization of 4.4 trillion won evaporated.
Lee Hang made his name public in Korea by appearing at the’K-Drone Control System’ flight demonstration event held last November by the Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport. At this event, Lee Hang’s two-seater class aircraft (EH216) loaded a bag of rice and flew a 1.8 km section around Yeouido Hangang Park, Seogang Bridge, and Mapo Bridge for about 7 minutes. The city of Seoul purchased Lee Hang’s drone for about 300 million won for this event.
Domestic investors who have invested in this port are turning the arrows of criticism into the city of Seoul and the Ministry of Land, Infrastructure and Transport. “I believe in Seoul City and the Ministry of Land, Infrastructure, and Transport, and I was in the back of the head,” they claim. Even when the Seoul Metropolitan Government held a flight demonstration event last year, it was pointed out that “Drones made in China were brought in for domestic events.”
The short sale report contained a problem with the operation license of the drone EH216, which was purchased by Seoul city. Lee Hang announced that the EH216 has received a’manned class’ that can carry passengers, but Wolfpack Research claims that the aircraft has received a’leisure test flight permit’. Wolfpack Research points out that the EH216’s production environment is also at the level of assembling several parts without a proper manufacturing line.
The city of Seoul responded through a local agent in China who helped in the process of purchasing Lee Hang’s drone. When the city purchased the drone last year, the city decided to purchase it without even conducting due diligence in China. This is because business trips to China were difficult due to the new coronavirus infection (Corona 19).
An official from Seoul said, “The business trip to China was blocked due to Corona 19, and instead of conducting due diligence, we checked the technology through real-time video through a local agent in China.” “The contract with Lee Hang is a one-shot gas purchase contract, not a business agreement or an additional purchase contract.” The aircraft purchased by Seoul City from Lee Hang is currently borrowed by Korea Aerospace University for free and is used for training and training of UAM professionals.
According to Savero of the Korea Securities Depository, as of the 16th, domestic investors owned $549.48 million (6051 billion won) of binomial stocks. It is the ninth-largest stock of US stocks held by domestic investors.
Reporter Park Jong-gwan [email protected]
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