Shorts pile into 500.com after sector crackdown
It's been a rough year and a half for 500.com Ltd, the Chinese online sports lottery operator whose revenue has been cut off during an industry crackdown. And short sellers see things getting even worse.
Bearish bets on the company's US-traded stock have surged to the highest levels ever before its second-quarter earnings report due on Wednesday. Sentiment has been souring since April on speculation the company will be left out when the regulators allow certain lottery services to be resumed after they were halted in March 2015.
"It seems like the government is thinking about giving licenses to select players in China," said Henry Guo, an analyst at New York-based M Science LLC who has been covering Chinese ADRs for a decade. "The short-interest rally reflects the probability that 500.com will miss the boat."
