Xethanol Shares Plummet After Sharesleuth.com Story Appears: Coincidence?

Mark Cuban's Sharesleuth.com has posted its long-awaited first piece, on Xethanol Corp. (XNL). The stock chart since the story appeared is below (and it's not pretty):

As the Sharesleuth story reports:

Xethanol Corp. bills itself as a biotechnology-driven ethanol company that can turn wood chips, corn stalks and paper sludge into cheap alternative fuel.

But a Sharesleuth.com investigation found no evidence that Xethanol has produced significant quantities of ethanol from those raw materials. Combine that with Xethanol's announcement that it'’s poised to become one of the first companies to commercialize that technology - a sort of Holy Grail in the renewable-energy world -– and you'’ve got the type of inconsistency that Sharesleuth seeks to uncover with its stories.

For those of you unfamiliar with Sharesleuth, it purports to provide "independent Web-based reporting aimed at exposing securities fraud and corporate chicanery." As I mentioned previously, I'll be looking forward to seeing what effect Sharesleuth's stories have on the featured companies.

A quick glance at Yahoo! Finance indicates that the stock was down 20% between yesterday and today, with much of the decline coming shortly after Wednesday's opening bell.

XNL 2-day chart:

This could be due to people taking Sharesleuth's information seriously, or it could be due to Cuban putting in his short sale this morning (I don't know - I'm just speculating). However, the stock had been steadily dropping for the last few months, so I wouldn't hazard a guess as to which (if either) is the case.

In any event, it'll be fun to watch what happens.

XNL 1-yr chart:

Comments

[WC Whiner:]

Maybe Cuban finally rounded up inventory somewhere. When they posted to Sharesleuth, he was short only 10,000 shares, under a basis point of exposure for him so basically a rounding error. XNL's been on my list to short for a while, but none of the brokers through which I trade my little account has been able to short it for me. Say he scared up 100,000 shares. That's still a rounding error, but it accounts for a lot of the volume.

I guess being a billionaire might just have its advantages, huh?

2006 Aug 10 01:04 PM