Shares of GigaCloud Technology (NASDAQ: GCT) were up 13.4% as of 12:30 p.m. ET Friday after the company issued a press release responding to a short-seller’s report.
For perspective, GigaCloud stock plummeted nearly 19% yesterday after short-selling firm Culper Research published a critical report claiming — among other things — that the Chinese B2B e-commerce specialist has not only misled investors regarding the size of its operations in the United States, but has also overstated the extent of its efforts to leverage artificial intelligence as a competitive advantage in its niche.
“We are short GigaCloud Technology […] because we believe — in a playbook reminiscent of the early 2010s ‘China Hustle’ era — that the Company’s business is a fraction of what it has claimed,” Culper’s report explained.
Shares of GigaCloud rebounded today, however, after the company issued a press release insisting the “report lacks merit and contains numerous, defamatory, selective, inaccurate, incomplete, and misleading statements and speculations.”
GigaCloud elaborated:
The report demonstrates a fundamental lack of understanding of the Company’s business and financial condition. The Company is reviewing the claims and considering appropriate courses of action to protect the interests of all of its shareholders. […] Investors are cautioned that the claims come from a short seller. Therefore, investors shall exercise caution when considering these claims.
To be sure, most investors would often do well to take claims brought by short sellers with a grain of salt, considering the firms stand to benefit when shares of their chosen targets decline. But t’s also important to note that GigaCloud did not specifically refute any of the claims made by Culper Research in its 27-page report.
But GigaCloud also noted it will make “additional disclosures in due course,” promising to communicate with shareholders and the public in a timely fashion.
In the meantime — while shareholders are rightly encouraged that GigaCloud has pledged a more comprehensive response is on the way — it’s no surprise that even after today’s bounce, shares are still trading lower than before the report was published.
10 stocks we like better than GigaCloud Technology
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and GigaCloud Technology wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 25, 2023
Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
