If you recently invested in Pheton Holdings Ltd (NASDAQ:PTHL), The Bear Cave warns that you may have fallen victim to a pump-and-dump scheme.
What To Know: The Bear Cave released a report on Chinese health care company Pheton Holdings on Tuesday, which sparked a massive sell-off in shares. The weakness has continued on Wednesday following the short seller’s stark warning.
The Bear Cave warned Tuesday morning that overseas groups appeared to be manipulating the stock price of Pheton and investors were “at risk of a near-term, severe stock collapse.” The collapse has played out over the past two trading sessions, with shares tumbling more than 90% on Tuesday and being halted multiple times amid aggressive selling.
The short-focused research firm alleged that “overseas scammers” were running up the price of Pheton based on false rumors that Gilead Sciences (NASDAQ:GILD) was preparing to acquire or partner with the company.
“These unsubstantiated rumors match a familiar pattern in which overseas stock scammers promote tightly held U.S.-listed Chinese companies on the basis of spurious M&A rumors, only for them to later experience sudden intraday stock collapses, often falling 90% or more,” the short seller wrote in the report.
With Pheton Holdings shares down more than 96% over the past two sessions, Benzinga has reached out to the company for comment on the report.
The Bear Cave alleged that the scammers used WhatsApp trading groups to promote a potential tie-up between Pheton and Gilead, noting that the people running the trading groups were calling for an announcement before Aug. 6.
An individual who was involved in one of the stock groups told The Bear Cave that the alleged scammers “pressured” members to buy shares of the stock and send screenshots to confirm their holdings.
The short seller flagged a pattern of overseas scammers following this playbook for other Chinese companies trading on the Nasdaq.
According to The Bear Cave, related groups reportedly ran similar pump-and-dump schemes on Ostin Technology Group Co Ltd (NASDAQ:OST), which hit 52-week highs of $9.40 in June before plummeting to around 8 cents at last check.
Earlier this year, “overseas scammers” made similar acquisition claims related to China Liberal Education Holdings (NASDAQ:CLEU) before the stock tanked about 98% in one day. Jayud Global Logistics Ltd (NASDAQ:JYD) also fell about 95% in April after surging on acquisition rumors, the short seller said.
Pheton Holdings’ annual revenue has declined from about $680,000 in 2022 to approximately $448,000 last year. The company also reported a net loss of around $661,000 for 2024, according to the short seller report.
PTHL Price Action: Pheton Holdings shares were down 28.5%, trading at $1.18 at the time of publication Wednesday. The stock opened for trading on Tuesday at $31.25, according to Benzinga Pro.
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