Nano-X Shares Plunge After Muddy Waters Says Company Has “No Product To Sell Other Than Its Stock”

Nano-X shares are plunging this morning after well known short seller Muddy Waters Research has published a new report comparing it to Nikola on numerous occasions (this year’s short reference du jour, we guess) and saying it “has no product to sell other than its stock.” Shares have fallen 20% in the pre-market.

The report says:

We are short NNOX because we think it is a much bigger piece of garbage than Nikola will ever be. There are important similarities, though. Nikola rolled a truck down the hill to try to prove it’s real. NNOX almost certainly used somebody else’s chest images to try to make its ARC machine look real.

Both Nikola and NNOX try to legitimize themselves by using the halo of respectable companies. Nikola gave a bunch of stock away to GM. Nanox issued options for 1.2 million shares at $2.21 per share (worth ~$32.1 million) to the president of SK Telecom after SK Telecom happened to invest in NNOX.

Muddy Waters claims the company has faked this demo video and has revealed that a “convicted felon appears to be behind [the company’s] IPO.”

MW is short $NNOX. We conclude that $NNOX has no product to sell other than its stock. Like $NKLA, NNOX appears to have faked its demo video. A convicted felon appears to be behind the IPO. A US partner has been requesting images for 6 months to no avail https://t.co/MNndMYTcd9

— MuddyWatersResearch (@muddywatersre) September 22, 2020

“But NNOX gets much worse,” the report says. “A convicted felon, who crashed an $8 billion market cap dotcom into the ground, was seemingly instrumental in plucking NNOX out of obscurity and bringing its massively exaggerated story to the U.S. NNOX touts distribution partnerships that supposedly amount to $180.8 million in annual commitments. Almost all of the company’s partnerships give reason for skepticism.”

MW also takes exception with NNOX’s Hadassah hospital partnership: 

Another halo NNOX is using to try to legitimize itself is that of “Nobel Peace Prize-nominated” Hadassah hospital. We are convinced that this partnership has been greatly misrepresented. As background, the chairman of NNOX’s audit committee is the chairman of the board of Hadassah. He also received options exercisable at $2.21 per share. We have tried multiple routes to understand what exactly is happening with the ARC at Hadassah, yet we have been unable to get anybody to even confirm that the device is operating at the hospital. Some investors are apparently under the impression that data from studies at Hadassah forms the backbone of NNOX’s 510(k) submission. However, that misunderstands the timeline of events and the submission process.

Recall, yesterday we posted an epic shouting match between Muddy Waters’ Carson Block and CNBC’s Wilfred Frost over the perceived usefulness of sell-side research, most of which – as Carson rightfully pointed out – is garbage is used to lure companies into investment banking business.

It was after yesterday’s appearance the Block teased his Muddy Waters would have a new short out this morning.

Recall, Citron Research also blasted Nanox Imaging days ago, calling the startup “Theranos 2.0” according to Radiology Business. Citron had claimed the company was “merely a ‘stock promotion’ amassing millions without any FDA approvals or scientific evidence.” Citron had also claimed “the company made false statements to both the SEC and investors to inflate its stock value”.