Shares of Chinese sports lottery site 500.com surged as much as 25% on Tuesday despite the company announcing a quarterly loss, the resignation of top executives, and saying it is currently generating no sales.
In the first quarter, the company reported an earnings per share loss of 6 cents, way off the estimate for a profit of 28 cents, according to Bloomberg.
The company reported sales of $US15.9 million, a 32% decrease from the previous period and missing expectations for $US24.7 million. The company recorded a net loss of $US8.4 million in the first quarter.
What’s more, the company is not generating any revenue right now.
In March, it reached an agreement with the Chinese government to suspend all online lottery sales, starting from April 4.
In the earnings release, it noted that its new active users fell 42.5% to 844,000 in the first quarter.
In the earnings statement Tuesday, the company said: “As a result of the provincial sport lottery administration centres’ decision to temporarily suspend accepting online lottery orders, or the temporary suspension, 500.com’s transaction volume decreased significantly. The Company recorded operating loss for the first quarter of 2015 and is currently not generating any revenue due to the temporary suspension.“
It further announced that its CEO, Man San Law, resigned on May 15 and remains chairman; it said it appointed its president as CEO simultaneously. Qi Li, a director, also resigned “for personal reasons.”
Its stock is down 37% over the past 12 months, and has rallied 21% year-to-date.
Here’s a chart showing the surge in shares on Tuesday: