Shares of Eros International, the leading global distributor of Bollywood movies, swung violently in the past day as the company was hit by allegations about its earnings.
The company, which is operated from the U.K. and has a New York stock listing, saw its American Depositary Shares plunge by 20% on Monday to $14.65. That followed several days of decline, which dragged the stock down 45% in a week.
On Tuesday, in pre-market trading, the shares rebounded by 16% to $17.12 after the company issued a statement denying the market rumors.
The slide began last week after a Twitter user known as Market Farce said that a recent increase in Eros’ earnings from the Middle East were not legitimate. That was followed by Wells Fargo investment analyst Eric Katz cutting his rating of Eros stock, saying that he was not happy with the company’s explanations of the United Arab Emirates revenue surge.
“Given the recent price volatility in our stock, we would like to confirm that nothing has materially changed to the strong business fundamentals of the company communicated previously,” Eros said in a statement to media and investors.
It addressed the issue of revenue growth from its new online businesses. “In addition, our game-changing OTT platform ErosNow, is progressing very well and we expect to launch a host of new product features, pricing plans and originals in the forthcoming quarters to build on that momentum. Our base of 30 million registered users that we announced as of September 30, 2015 are a combination of web, WAP and APP customers which we acquired organically as well as with synergies from our Techzone acquisition,” Eros said.
“The positive growth and momentum in our Q1 results continued into Q2 with a further string of hits under our belt. We will be announcing what we expect to be strong second quarter results in the first half of November (specific date to follow), which will allow us to demonstrate growth in revenues, profitability and cash flow from operations,” the statement said.