Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What:Shares of Chinese online sports-lottery company 500.com Ltd were down 16.7% as of 1:00 p.m. EST Monday amid rumors its CEO has been detained and the Chinese government might revoke its license
So what:500.com has apparently emailed shareholders insisting the rumors are false and were "conveniently spread during China's seven-day new year's holiday."The company also reminded investors the Chinese government mandates that lottery sales be suspended during the Chinese New Year holidays nationwide and will resume on Feb. 25, 2015.
Now what: These kinds of rumors are nothing new for 500.com. The company had to reiterate in a press release last May, for example, that it had obtained all proper approvals to operate an online sports lottery service in China after several "unsubstantiated rumors regarding the legality" of its operations were circulated in the media.
What's more, shares of 500.com also plunged around 6% earlier this month after it posted a 44% decline in operating profit and said ticket purchases might decline this quarter. To be sure, competition in the online lottery space has heated up of late as larger companies like Tencent Holdings, NetEase, and Sina look to expand their respective market shares.
Given all this uncertainty, I'm personally content to watch 500.com's story unfold from the sidelines.
The article Why 500.com Ltd Stock Dropped Today originally appeared on Fool.com.
Steve Symington has no position in any stocks mentioned. The Motley Fool recommends NetEase.com and Sina. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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