Netshoes (Cayman) Limited (NETS) Accused of Overinflating Its Competitive Edge
According to the complaint against the company's officers and directors for alleged violations of the Securities Act of 1933, Netshoes, which raised over $148.5 million in proceeds in its IPO, represented in its registration statement that the company had significant market share in a large addressable market and highlighted customer loyalty. Netshoes also touted that it did not have a relevant direct competitor in the eCommerce sports category in the Latin American region. Contrary to these representations, Netshoes faced intense competition in the sports, fashion, and beauty ecommerce market, which threatened its market share and profitability. Netshoes began to report dismal financial results in August 2017 and its stock price has since steadily plunged to only $2.30 per share—a decline of nearly 86% in one year.
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