What was the impact of the short attack

Reference no: EM132959485

Question

Nearmap Limited (ASX:NEA) was recently attacked by a short-seller, J-Capital, on Thursday 11th February 2021. The short-seller claimed that NEA's projection of growth in the U.S. markets was overstated. Additionally, they claimed that the company understated the level of competition. NEA management quickly responded to the claims on Monday 15th February 2021. The following table provides trading data on NEA and the broad market index ASX200 around the event.

Conduct an event study to answer the following questions. You need to detail and explain your steps and calculations. Answers should be supported by your calculations.

What was the impact of the short attack on the firm value on the 11th February 2021?

The short-seller started their $10mil short position on 5th February 2021 and closed out the position on 17th February 2021. What would be their profit/loss during the trading
period?

Do you think that the company failed or succeeded to defend against the short-seller's attack? Explain.

Reference no: EM132959485

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