Universal Travel Group (UTA) shares meandered between positive and negative territory Thursday as investors digested a blogger’s claim of fraud against the tiny Chinese company.
Universal Travel dropped 19% on Wednesday and was the biggest decliner on the New York Stock Exchange, prompted by John Hempton, an Australian fund manager and blogger, who alleged that the online booking and travel company may be committing fraud. On Thursday, shares fell as much as 6.7% before bouncing back into positive territory. The stock, however, fell again recently, down 1.6% at $3.80.
In a 5,500-word blog post, Hempton described his troubles booking flights and hotels through the website and questioned the company’s accounting, suggesting its results are unsubstantiated. He also disclosed he’s shorting Universal Travel Group, a strategy investors use to profit from a declining stock price.
“It looks like this travel site is all front end, no-back end — there is no actual booking, no mechanism of collecting payment — no nothing really,” Hempton wrote on his “Bronte Capital” blog.