On the very same day this information came out, 'Viceroy Research Group' managed to release a 33-page 'analysis' of these results. With illustrations.
>We believe AMD is worth $0.00 and will have no choice but to file for Chapter 11 (Bankruptcy) in order to effectively deal with the repercussions of recent discoveries.
Viceroy Research lists no employees or contact address, but it appears they are not a crack team of hardworking & incisive business analysts, but two Australian teenagers and a former UK child social worker, struck off in 2014 for misconduct.
They have previous form in producing or plugging short-call stories (quite effectively), and latterly investigated by South African media for similar shady business.
It took very little internet sleuthing to find this stuff out. None of the tech press bothered to do so.
Disclaimer: I have no position in AMD.
Edit: link to Viceroy https://viceroyresearch.org/
And that's the creation date, not even when they were published.
Edit: And it gets better! If you check the HTTP headers when requesting the whitepaper from their servers, it will tell you that the file was placed there (last-modified) at 13:22 GMT, so just 1 hour before Viceroy Research Group created their analysis - and probably ages before the actual news broke.
That said, unless the whole "research" is fake, I wonder if we could be seeing more such tactics in the future against tech companies, and whether or not that would give them an immense incentive to care about security - or risk getting ruined in the stock market.
Honestly, such a huge incentive may actually be needed to get most companies to get about security. The money equation needs to make sense to them. Right now most think investing the absolute minim amount in security for compliance reasons is already too much money wasted on security. If this were to become common, I think maximizing security would actually start looking quite profitable to them.
I mean, this research is already saying there are some backdoors in AMD's chips. I imagine in the future, companies would be way more careful about allowing backdoors in their products, whether intentionally or by mistake, if they knew they risked getting their stock crushed.
So yeah I just like to play with this idea a little bit. So far this revelation doesn't seem to have had the "desired" effect by the backers of the research, though, but we'll see. I just want to know whether or not the research is real, so I'll wait for AMD's confirmation. I assume AMD wouldn't try to lie to us about it, because there are now probably at least a dozen security teams trying to pick AMD's chips apart, so the flaws would be found soon enough, if real.
Not a sure-thing conviction, but certainly a dangerous business plan.
> If you think a company is bad, or fraudulent, you can sell its stock short and try to profit when everyone discovers its problems and the stock drops. If you want to hurry that process along, you can always noisily publish research reports explaining why the company is bad or fraudulent. If your research reports convince other investors of your thesis, then the stock will drop, and you will make money. There are more longs than shorts, and more dicey public companies than noisy short hedge funds, and so people who use this strategy tend not to be especially popular. In particular people often go around accusing them of fraud, or market manipulation. "Wait," people ask, "how is it not manipulation to short a stock and then publicly announce that the stock is bad?" I am always confused by this complaint. Just flip it around: It's not manipulation, surely, to own a stock and then publicly announce that the stock is good.
(Followed by further justification of this position).
On the other hand, it seems that uncovering new true information, and then taking a short position on it, not illegal.
A lot of the comments in this thread were assuming that there was some crime just from reporting the bad news and trading on it, unconditionally on whether or not the news was true.
If the claims you're making are true, then it's not deceiving or defrauding, even if the way the information was published was immoral under standard professional ethics.
If these vulnerabilities were misrepresented by the short sellers that funded it, then I suspect that would bring them into stock manipulation territory.
I can think of a number of approaches, but nothing I could catergorise as trivial.