Gridsum Holding Inc. (GSUM) Accused of Misleading Investors About Its Financial Condition

According to the complaint, Gridsum Holding Inc. (GSUM) emphasized strong financial and operating results in its public filings, noting that its "topline maintained its robust growth trajectory" and that the company expects to grow its customer count by 30% to 40% in 2017.  Gridsum also noted its continued effectiveness at attracting new clients and touted its net revenue increase of 57.3% year over year to RNB 100.6 million. However, the truth about Gridsum's financial condition was revealed on April 23, 2018, when the company announced that its audit report for the company's financial statements for the year ended December 31, 2016, should not be relied on.  Gridsum admitted that its auditor found issues related to revenue recognition, cash flow, cost, expense items, and their underlying documentation.  On this news, Gridsum's ADR price fell over 16% to close at $6.12 on April 23, 2018.

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