EHang Holdings (EH) shares plunged Tuesday after short-seller Hindenburg Research released a report on the company, alleging it has "fake sales."
Shares of the China-based electric vertical takeoff and landing (eVTOL) aircraft company are down more than 14% at the time of writing.
According to Hindenburg, which has taken a short position in EHang, the company's "hollow order book and fake sales" make the company "last in line for takeoff."
The short-selling firm said the company has generated net losses since its inception and currently trades at "a significant premium to competitors," while it has also argued that aircraft manufacturing is a "matter of life and death," but "EHang has operated on a shoestring budget relative to peers."
"EHang’s competitors have hundreds of millions in cash, while EHang has only $44.9 million left, representing limited runway in the capital-intensive aviation industry," said Hindenburg, claiming that the company was short in cash in July before a $23 million capital raise "led by a South Korean music producer who was previously put on an INTERPOL wanted list."
"Overall, EHang seems to have a major credibility issue," Hindenburg argues. "Trust is crucial in the aviation industry, both for investors and potential customers who are literally putting their lives at risk. We think the company is a fatal accident waiting to happen, both for investors and for passengers."