Longwei Petroleum Investment Holding Limited (NYSE:LPH) shares nosedived as much as 79% on Thursday and the stock was eventually halted after a harsh, bearish report made by GeoInvesting.com was published and syndicated onto popular financial portals around 9:55AM EST.Longwei Petroleum: The Most Brazen China Based U.S. Listed RTO , a 6,815 word report that augured an inevitable trading halt and referred to the Company as a “brazen fraud” found its way onto news feeds for Google Finance and Yahoo Finance just prior to 10:00AM EST, and within minutes the twittersphere was buzzing with $LPH tweets. According to StockTwits.com, a financial communications platform founded in 2008 by entrepreneur Howard Lindon, the message volume for $LPH tweets exceeded 535.71% of the rolling 7 day average. The message volume shows the week over week percentage change in message volume from the StockTwits community. Needless to say, $LPH tweets were trending with upward momentum that may have been inversely comparable to the downward spiral that Longwei Petroleum shares experienced.
GeoInvesting.com has developed a reputation within the financial community for issuing detailed, shortbiased reports whereby the stocks they write about will more often than not experience a substantial decrease in price per share. This reputation is certainly not unwarranted as evidenced by their track record which includes the following stocks: Puda Coal Inc. (OTC:PUDA), Yuhe International, Inc. (PINK:YUII), Sino Clean Energy, Inc. (OTC:SCEI)), Orsus Xelent Technologies Inc. (PINK:ORSX), Lotus Pharmaceuticals, Inc. (OTC:LTUS), New Energy Systems Group (NEWN), and Subaye Inc. (PINK: SBAY).
Puda Coal Inc. (OTC: PUDA), for instance, began its cataclysmic downfall shortly after GeoInvesting published its first Puda Coal report on April 8, 2011. Although GeoInvesting’s track record suggests that the report was published while Puda Coal was trading around ~$10, in fact the stock traded as high as $13 per share during the weeks prior to the publication of GeoInvesting’s report and quickly fell to $6 before it was halted. The stock was eventually delisted and currently trades at less than $0.05 per share. Having in mind that Thursday’s GeoInvesting report describes some “eerie ties” between Longwei Petroleum Investment Holding Limited and Puta Coal Inc. ; it should have come as no surprise that Longwei Petroleum shares would get thrashed after the release of GeoInvesting’s report.
At about 11:08AM, just as shares bounced back to $0.62 after hitting an intraday low of $0.46, the stock was halted. According to the trading halt codes outlined on NASDAQTrader.com, Longwei Petroleum’s T1 halt code means that trading was halted pending the release of material news.
Moreover, when the dust seemed to be settling in the aftermath of Longwei Petroleum’s bombardment as shares tumbled to a new 52 week low and were halted intraday multiple law firms immediately went tooth and nail at the opportunity to potentially file multimillion dollar future lawsuits and began issuing press releases announcing investigations into the Company. The following law firms announced investigations as early as 2:47PM EST on Thursday:
- The Rosen Law Firm (see PR here)
- Bronstein, Gewirtz & Grossman, LLC (see PR here)
- Glancy Binkow & Goldberg LLP (see PR here)
And because misery loves company, Longwei Petroleum’s coup de grace was still to come. At 3:39PM EST, RedChip Research, an investor relations firm, announced the suspension of research coverage for Longwei Petroleum. This came just days after the Company announced that it had renewed its agreement with Redchip.
Only time will tell whether Longwei Petroleum Investment Holding Limited was the unfortunate subject of a panicking but presumably hyped selloff as GeoInvesting issued a ravaging bearish report; then again, perhaps Longwei Petroleum really is guilty of the accusations brought about by GeoInvesting, including a virtually nonexistent wholesale petroleum business and inconsistencies in their S.E.C. filings. In that case the damage will be extensive and quite severe. Shareholders arguably should have had cause for celebration on Thursday as the Company raised revenue guidance for the fiscal year ending 2013 just one day prior, but instead, the Longwei Petroleum profit party crashed hard… along with share prices.