U.S. markets rebounded from Monday’s dip with a strong showing as of Tuesday’s noon hour. All three major indexes were up more than 1%, with the Nasdaq Composite positively roaring back with a gain so far of about 1.5%.

Among meme stocks we follow, advancers and decliners were about even, but one high-flying stock was hammered. It looks like a short seller has caught up with Camber Energy Inc. (NYSEAMERICAN: CEI). According to analysts at Kerrisdale Capital Management, the central issue is the number of Camber Energy shares outstanding:

We believe the market is badly mistaken about Camber’s share count and ignorant of its terrifying capital structure. In fact, we estimate its fully diluted share count is roughly triple the widely reported number, bringing its true, fully diluted market cap, absurdly, to nearly $900 million. [emphasis in original]

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At Monday’s closing price of $3.09 per share and a widely reported number of 104.2 million shares outstanding, Camber’s market cap was around $322 million. Shares traded as low as $1.03 earlier in the morning, tamping down Camber’s market cap below $147 million.

Kerrisdale spells out how Camber’s Series C preferred shares, historically owned by a single investor, Discover Growth Fund, can be converted into common stock at the investor’s will, provided that the fund’s stake in Camber doesn’t rise above 9.99%. That’s a pretty sweet deal according to Kerrisdale:

The face value of the preferred shares converts into common shares at a fixed conversion price of $162.50 per share, far higher than the current trading price – so far, so good (from a Camber-shareholder perspective). The problem is the additional “conversion premium,” which is equal to the full seven years’ worth of dividends, or 7 x 24.95% ≈ 175% of face value, all at once, and is converted at a far lower conversion price that “will never be above approximately $0.3985 per share…regardless of the actual trading price of Camber’s common stock” (but could in principle go lower if the price crashes to new lows). The upshot of all this is that one share of Series C preferred is now convertible into ~43,885 shares of common stock.

Kerrisdale calculates that there are 3,753 of the preferred shares outstanding, valued at $164.7 million as of last night’s closing price. Add in another $20.5 million in convertible notes, and the number of fully diluted shares outstanding rises from 104.2 million to 285.3 million, yielding a market cap of $882 million as of Monday’s close.

Our own look at Camber early last month noted that the company’s float was far less than the outstanding stock and that there had been so many reverse splits that a share of Camber stock purchased at the company’s IPO in 1997 would have fetched a price of more than $1.4 million.

As for that clean energy license that Camber received last month and that some retail investors point to as a harbinger of future profits, Kerrisdale says it’s “nearly worthless” and goes on:

It’s ridiculous to have to say this, but Camber isn’t worth $900 million. If it looks like a penny stock, and it acts like a penny stock, it is a penny stock. Camber has been a penny stock before – no more than a month ago, in fact – and we expect that it will be once again.

Tuesday’s only double-digit gainer among the meme stocks was SmileDirectClub Inc. (NYSE: SDC). It was among the most talked-about stocks on Reddit, trailing only Facebook and the S&P 500 SPY fund, but that could be due to chatter among the company’s customers. The company had no specific news.

Cannabis producer Tilray Inc. (NASDAQ: TLRY) is reporting quarterly results before markets open on Wednesday. We included the company in our earnings preview posted earlier.

Lordstown Motors Corp. (NASDAQ: RIDE) traded down about 10% in Tuesday’s premarket and did not move much afterward. As we noted in our early morning coverage, Lordstown’s stock was downgraded to Sell at Morgan Stanley and the firm’s price target was dropped to $2.

Camber Energy stock dropped by more than 60% earlier in the noon hour and currently trades down about 56% at $1.35 in a 52-week range of $0.33 to $4.85. Nearly 500 million shares had been traded thus far on Tuesday, compared to a daily average of around 120.6 million.

Lordstown shares were down 9.3% to $5.30 as the noon hour drew to a close. The stock’s 52-week range is $4.77 to $31.57. The average daily trading volume is around 11 million shares, and nearly 17 million had changed hands already.

Tilray traded up about 2.5% to $11.01, in a 52-week range of $4.87 to $67.00. The average daily trading volume is about 18.2 million shares, and 9.2 million had traded.

SmileDirectClub traded up 12.2%, at $5.70 in a 52-week range of $4.63 to $16.08. Almost 13 million shares had traded so far, compared to a daily average of 14.4 million.

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