Israeli Stocks Alarum and REE Plunge Over 50% Amid Negative Reports and Legal Troubles

Two Israeli stocks, Alarum and REE, sharply declined at the start of the trading week on Wall Street following recent negative news. Alarum's shares fell over 50% in pre-market trading to a 3.5-year low, wiping out approximately $25 million in market value. The company, which also trades on the Tel Aviv Stock Exchange, saw increased local trading after a sharp drop on Friday, coinciding with the U.S. Independence Day holiday when Wall Street was closed. Alarum, led by Shahar Daniel, operates in data collection and recently disclosed an FBI investigation into its subsidiary NetNut. The probe concerns allegations that NetNut may have connected internet-enabled household devices like TVs and smartphones to a network used to mask users’ locations without owners' consent. Alarum emphasized its full cooperation with law enforcement and commitment to investigating any misuse of its infrastructure. The company also reported disruptions in some services due to seized domains linked to its subsidiary, warning of potential significant operational impacts if issues persist.

Meanwhile, REE revealed on Monday that it filed for a stay of proceedings at the Tel Aviv District Court following a report issued the previous day. REE’s stock is expected to be delisted from Nasdaq on Tuesday after failing to meet continued listing requirements due to its share price falling below one dollar. The stock plunged 51% in pre-market trading. Since going public nearly five years ago, REE has lost 99.8% of its market value, dropping from $3.1 billion to about $6.1 million. The company owes over 51 million shekels to employees and other creditors. In its court filing, REE cited a severe cash flow crisis and insolvency caused by several external factors, including geopolitical tensions such as the war in Israel and operations against Iran, U.S. tariffs imposed during the Trump administration, deteriorating capital-raising ability, and its capital-intensive business model.