Chromadex Corp (NASDAQ:CDXC) Crashed Following a Shorter’s Exposé
A short-seller’s report advising against investing in Chromadex Corp (NASDAQ:CDXC) hit CDXC hard yesterday. So hard that the ticker was the biggest loser on the charts yesterday. Was this report painting a true picture of the company and its business? Not exactly. Did achieve what it had set out to do? You bet!
Indeed, the stock value of Chromadex Corp fell a staggering 43% yesterday after a publisher on a popular website dedicated to stock discussions put out a largely negative report on the stock in question. As a result, CDXC hit a 52-week low of $2.84 per share on a record-breaking volume in excess of 17 million shares. A few minutes into today’s session, CDXC has recovered at least a portion of lost ground to $3.20 per share after management announced they would take measures to offset the damage done by the shorter. What options does CDXC have, though?
Even though Chromadex’s response lays great emphasis on the assumption that the shorter’s opinion relies heavily on misinformation and selective historical facts, most of these facts are true, anyway.
It is a fact that CDXC got a boost by the recent uplisting to the Nasdaq.
It is a fact that the real reason behind the resignation of BoD member Hugh Dunkerley is directly related to the inclusion of his name in an SEC litigation release. The latter accuses him, along with a number of other defendants, of fraudulent investing activities. It is a fact that the company’s management did not go public about that and therefore missed the opportunity to steer clear of an impending scandal.
Last but not least, it is a fact that the company’s pre-June 20 market cap of $200 million does not seem to make a true representation of its assets’ overall value.
As it is, the facts listed above inevitably had quite an adverse impact on CDXC‘s market value yesterday. In this respect, a 43% slump occurring within a single day is nothing short of a disaster for regular stockholders. At the same time, however, it is everything a shorter might ask for. Given the large number of shares changing hands yesterday, one could safely assume who the biggest winners and gravest losers were.
To sum it up, the report appears to have served its purpose in securing a short-term, yet a big devaluation of CDXC on the charts. Of course, the hit will hardly prevent the company from going forth with its scientific studies and potentially making progress in due course. It may even succeed in fully recovering its value in the foreseeable future, when actual milestones could take priority. We will keep an eye on the stock to see how it will unfold from now on.
