Why 21Vianet (VNET) Stock Is Up Today

NEW YORK (TheStreet) -- 21Vianet (VNET) was gaining 8.7% to $21.61 Monday after CEO Josh Chen sent a letter to shareholders regarding claims that the company is a Ponzi scheme.

The letter from the CEO addressed accusations that the Chinese data center service provider is a Ponzi scheme. Chen called the claim a "malicious and baseless attack," adding that it will "neither tarnish our record nor prohibit us from pursuing opportunities that we believe to be in the best interests of the shareholders."

'21Vianet is and has been adequately capitalized," Chen wrote. "It has also been alleged that we have, or likely will, breach our existing debt covenants. This is far from the truth."

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Last week Trinity Research published a report claiming that 21Vianet committed fraud via fabricated SEC statements. The report included photos of "ghost offices" and "ghost acquisitions" belonging to the company.

TheStreet Ratings team rates 21VIANET GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate 21VIANET GROUP INC (VNET) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk."

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