Lichen China Ltd. (NASDAQ: LICN) experienced a respectable 6% surge in its stock price yesterday and then followed by a remarkable 71% after-hour jump. This surge comes on the heels of a weaker performance yesterday, with the stock dropping nearly 4% during regular trading hours.
Radio Silence
Despite the surge in stock value, there is a notable lack of recent news regarding the company’s operations since its IPO last February, which raised $16 million. This absence of updates raises suspicions of potential market manipulation, potentially indicating a pump-and-dump scheme.
Corporate Structure
The company’s corporate structure reveals Legend Consulting HK, a holding company established in 2014, which remains inactive in business operations. Lichen Zixun, established in 2004, functions as the primary operating entity and is wholly owned by Legend Consulting HK. Additionally, Lichen Education, founded in 2014, operates as a subsidiary of Lichen Zixun, contributing to the company’s educational support services.
Financial Considerations
Questions arise concerning the company’s ability to pay dividends, which heavily depends on the financial performance of its operating subsidiaries.
Moreover, the company’s cash transfer policies, particularly concerning transfers between entities in the People’s Republic of China (PRC) and Hong Kong, are subject to regulatory restrictions and interventions by the Chinese government. These have the potential to impact its operational capabilities.
Conclusion
As investors monitor Lichen China Ltd.’s stock surge, concerns persist regarding the company’s operational transparency and regulatory compliance. The surge highlights the need for further scrutiny in financial markets to ensure adherence to standards and protect investors from potential risks.
