Dada Nexus Limited (DADA) Allegedly Overstated its Revenues
A shareholder filed a class action on behalf of all persons and entities that purchased or otherwise acquired Dada Nexus Limited (NASDAQ: DADA) securities between May 11, 2023 and January 8, 2024. Dada is a platform for local on-demand retail and delivery in China.
According to the complaint, during the class period, defendants failed to disclose that (1) Dada revenues from online advertising, marketing services, and operations and support costs were materially overstated, and (2) as a result, Dada would need to conduct an independent review to ascertain the financial impact and the scope of suspicious practices that led to overstated revenues and costs.
On December 19, 2023, the Company issued a press release announcing Mr. Lijun Xin would be stepping down immediately as Chairman of the Board due to personal reasons. In addition, defendant Beck Zhaoming Chen would be resigning as CFO immediately due to personal reasons.
Then, on January 8, 2024, Dada announced “that, in the course of its routine internal audit, certain suspicious practices were identified that may cast doubt on certain revenues from the Company’s online advertising and marketing services in 2023.” Specifically, “the Company currently estimates that approximately RMB500 million of revenues from online advertising and marketing services and RMB500 million of operations and support costs may have been overstated, respectively, for the first three quarters of 2023. In addition, the revenue guidance previously provided by the Company for the fourth quarter and full year of 2023 should no longer be relied upon until further notice.” On this news, the price of Dada’s American Depositary Receipts fell $1.45 per share, or 45.87%, to close at $17.12 per share, on January 8, 2024, damaging investors.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Dada Nexus Limited. Shareholders who want to act as lead plaintiff for the class should contact Robbins LLP. Plaintiffs must file their lead plaintiff papers by March 11, 2024. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
