Chinese Drone Technology Company 'Ehang' Crash... What About Domestic Investors?

Wolfpack Research "Ihang Involved in False Contracts and Technology Manipulation"
Seohak Gaemi Holds About 600 Billion Won Worth of Ihang Stocks... Concerns Over Potential Damage

On the 16th (local time), global investment information firm Wolfpack Research released a report containing evidence of false contracts and technology manipulation by Chinese drone technology company Ehang. (Source: Wolfpack Research report capture)

[Asia Economy Reporter Gong Byung-sun] Ehang, a Chinese urban air mobility (UAM) technology platform company that had been gaining attention, saw its stock price plunge more than 60% following revelations of false contracts and technology manipulation. This has raised concerns about significant losses for domestic investors who recently invested in Ehang, which had been regarded as a leading player in the drone industry and gaining popularity.

On the 16th (local time), Ehang Holdings, listed on the U.S. Nasdaq market, closed at $46.30 per share, down $77.79 (62.69%) from the previous day. Ehang’s stock price had remained at $21.11 on December 31 last year but surged to $129.80 on the 12th. This represents about a sixfold increase just this year.

However, after a short-selling report was released accusing Ehang of engaging in false contracts and technology manipulation, the stock price plummeted. Global investment information firm Wolfpack Research published a report titled “Ehang’s Stock Price Will Crash” on the 16th (local time). Wolfpack Research pointed out that “Ehang’s stock price is heavily inflated beyond its actual value.”

According to Wolfpack Research, Ehang did not have proper production facilities. When Wolfpack Research visited Ehang’s headquarters in Guangzhou, China, there were no mechanical facilities such as assembly lines for production. It was difficult to find working employees, and only one security staff member was present, indicating a lack of proper security. Meanwhile, the factory in the Yunfu region of China, which was said to have started operations in December last year, was not even completed.

There were also signs of fabricated contracts. According to Wolfpack Research, ‘Kunxiang,’ which signed a UAV purchase contract worth about 500 billion KRW with Ehang, was a company hastily created for the false contract. Kunxiang was established only nine days before signing the contract with Ehang. Additionally, two of Kunxiang’s three addresses were fake. A farcical situation occurred where the address was supposed to be on the 13th floor of a building, but the actual building only had 11 floors.

The problem is that many ‘Seohak Ants’ (domestic investors investing in overseas stocks) have invested in Ehang. According to the securities information portal SaveRo, domestic investors held approximately $549.49 million (about 605.5 billion KRW) worth of Ehang shares as of the 15th. This ranks ninth among U.S. stocks held by domestic investors.

In particular, greater damage is expected because many invested in Ehang under the premise of value investing. Ehang had been evaluated as a highly promising company, having succeeded in commercializing the world’s first manned drone. Recently, it attracted more attention as there were predictions that Ehang might be included in ‘ARKX,’ a space exploration ETF to be launched by ARK Invest, a specialized ETF management company known for high returns.

Office worker Joo Hyun-jin (38, pseudonym) said, “I invested about 300 million KRW under the premise of value investing because it was said to be the most advanced in the drone industry,” and lamented, “I never thought such a thing would happen to a company listed on Nasdaq.”

This content was produced with the assistance of AI translation services.