SHAREHOLDER ALERT: Robbins LLP Announces That BlueCity Holdings Limited (BLCT) is Being Sued for Misleading Shareholders
SAN DIEGO & BEIJING--(BUSINESS WIRE)--Jul 21, 2021--
Shareholder rights law firm Robbins LLP announces that a purchaser of BlueCity Holdings Limited (NASDAQ: BLCT) American Depository Shares (ADSs) filed a class action complaint against the Company and its officers and directors for alleged violations of the Securities Act of 1933 pursuant to the Company’s July 8, 2020 initial public offering (“IPO”). BlueCity operates a platform for the LGBTQ community primarily under the BlueCity brand in China, India, Korea, Thailand, and Vietnam. The platform provides products and services, including social and entertainment, online health consulting and online pharmacy, and assisted reproductive technology.
If you suffered a loss due to BlueCity Holdings Limited’s misconduct, click here.
BlueCity Holdings Limited (BLCT) Misled Investors Regarding the Company’s Capability for Sustainable Growth
According to the complaint, BlueCity conducted its IPO on July 8, 2020, issuing 5.3 million shares of the Company’s ADSs at $16.00 per share. The Offering Documents prepared in connection with the IPO purportedly contained untrue statements of material fact and were not prepared in accordance with applicable rules. Specifically, the Offering Documents represented that BlueCity has “invested significant resources to … ensure the sustainable growth of [its] platform,” that the Company has “a highly-scalable, cloud-based technology infrastructure to ensure the sustainable growth of [its] platform,” and that ”[t]alent development is fundamental to [BlueCity’s] sustainable growth.”
These statements were false or misleading and failed to disclose that: (i) defendants had overstated BlueCity’s business and financial prospects; (ii) the Company was ill-equipped to absorb the costs of becoming a publicly traded company, including IPO- and growth-related costs; and (iii) therefore, defendants had misrepresented the Company’s capability for sustainable growth.
On December 2, 2020, BlueCity announced its unaudited financial and operating results for the third quarter of the Company’s fiscal year 2020. BlueCity reported that the Company’s cost of revenues had increased 41.3% year-over-year, selling and marketing expenses had increased 86.3% year-over-year, technology and development expenses had increased 49.5% year-over-year, and general and administrative expenses had increased 4349% year-over-year. BlueCity attributed these increased costs to the growth of revenue-sharing costs, expenses related to the IPO, and increased advertising and promotion expenses and staff costs, among other things. On this news, the price of BlueCity ADSs fell $3.30 per share, or almost 23%, to close at $11.15 per ADS on December 2, 2020.
Then, on March 23, 2021, BlueCity announced its results for the fourth quarter 2020. BlueCity announced revenue of $42.7 million, which missed consensus estimates by $3.92 million. The Company also reported that its cost of revenues had increased 29% year-over-year, selling and marketing expenses increased 56.7% year-over-year, technology and development expenses increased 9.0% year-over-year, and general and administrative expenses had increased 345.5% year-over-year. On this news, BlueCity ADSs fell $3.25 per share, or almost 27%, over the following two trading sessions, to close at $8.92 per ADS on March 24, 2021, and has yet to recover.
If you purchased shares of BlueCity Holdings Limited (BLCT) pursuant to the Company’s IPO and would like more information regarding your rights, please contact Lauren Levi at (800) 350-6003 or firstname.lastname@example.org, or via our Shareholder Information Form.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
Robbins LLP is a nationally recognized leader in shareholder rights law. To be notified if a class action against BlueCity Holdings Limited settles or to receive free alerts about companies engaged in wrongdoing, sign up for Stock Watch today.
Attorney Advertising. Past results do not guarantee a similar outcome.
View source version on businesswire.com:https://www.businesswire.com/news/home/20210721005877/en/
CONTACT: Lauren Levi
5040 Shoreham Place
San Diego, CA 92122
KEYWORD: CHINA UNITED STATES NORTH AMERICA ASIA PACIFIC CALIFORNIA
INDUSTRY KEYWORD: LEGAL PROFESSIONAL SERVICES
SOURCE: Robbins LLP
Copyright Business Wire 2021.
PUB: 07/21/2021 03:21 PM/DISC: 07/21/2021 03:21 PM