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Cryptocurrency Miner SOS Continues Big Rally: What Investors Need To Know

Shares of SOS Limited (NASDAQ: SOS) were advancing strongly Wednesday, recovering from a steep sell-off in the week ended Feb. 26.

What Happened: The stock of China-based SOS is getting a lift from a long report by Scorpio VC, which defended the company in the wake of a short call by Hindenburg Research.

SOS provides cloud-based emergency services to businesses and individuals and has also diversified into cryptocurrency mining.

SOS’s foray into the insurance brokerage business in China in 2020 is seen as an attempt at business transformation and an exploratory step to acquire a national insurance broker in 2021, Scorpio VC said.

The firm also delved on SOS’s foray into cryptocurrency mining earlier this year. The company’s cryptocurrency business will likely achieve excellent results, it added.

Scorpio VC has a $40 price target for SOS.

Hindenburg’s report released Friday led to a 21% sell-off in SOS shares in the session.

“We are short $SOS, which we believe to be an obvious China-based shell game reanimating the corpse of a former China based company that earlier imploded 90% from its highs,” the short seller said.

On Monday, SOS said in a statement that it was the subject of attacks intended to manipulate its stock price.

“SOS Limited was recently attacked by short sellers with distorted, misleading, and unsubstantiated claims regarding the company,” the statement said. “The company also believes certain social media accounts of some company board members may have been impersonated or disabled for short periods of time.”

Related Link: What is Cryptocurrency Mining?

SOS Raises $96.7M Through Warrants: SOS said in an 8-K filing certain warrant holders have exercised all of the existing warrants to purchase up to 23.88 million ADSs of the company.

The exercise price of the warrants was $4.05 per ADS.

For exercising all of the existing warrants with cash, the company said it will issue each holder new warrants to purchase up to 23.88 million shares. The gross proceeds from the transaction are estimated at $96.7 million, SOS said in the filing.

The transaction closed March 1.

SOS said it intends to use the proceeds from the offering to develop its recently launched cloud cryptocurrency mining and cryptocurrency security and insurance business as well as for working capital and general corporate use.

At last check, SOS shares were jumping 18.24% to $8.04.

Related Link: Can You Mine Ethereum With PlayStation 5? Here’s What You Should Know

© 2021 Benzinga does not provide investment advice. All rights reserved.

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