What happened

Shares of Nano-X Imaging (NASDAQ: NNOX) had rocketed 250% from their IPO price through the close of trading last week. But the shares tumbled 23% yesterday after Citron Research issued a savage short report on the company, accusing the Israeli X-ray machine maker of being little more than "a stock promotion" and predicting the shares will go to $0.

Today, the selling-off started again early, as Nano-X stock fell a further 9%, then reversed course, recovered all their losses, jumped 16% higher, and then finally gave back some of their gains. As of 11:45 a.m. EDT, these yo-yoing stock movements have left Nano-X shares trading 5.5% above yesterday's close.

Why?

Image source: Getty Images.

So what

No mystery here: Nano-X stock fell this morning because it takes time for a stock to reverse course once it's started the kind of downward momentum we saw yesterday. But the stock did rebound eventually as investors learned that Nano-X management is disputing Citron's findings.

In a terse rebuttal this morning, Nano-X blamed Citron exclusively for "the unusual trading activities in its ordinary shares" yesterday (i.e. there was no other bad news happening at the company, just the report itself). And Nano-X went a bit further, arguing that Citron's report "contains factual errors and misleading speculations" and is "completely without merit."

Now what

Granted, as rebuttals go, this one was a bit long on absolutes and a bit short on specifics, but Nano-X management promised to "provide additional information on the allegations" after "carefully reviewing the report."

Where the stock goes from here will largely depend on whether Nano-X can put together a reasoned explanation for why Citron is wrong. It probably wouldn't hurt, either, if Nano-X could unveil a functioning CT scanner -- like the one Citron says it doesn't have.

10 stocks we like better than Nano-X Imaging Ltd.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Nano-X Imaging Ltd. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 1, 2020

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.