BlueCity Holdings Limited
BlueCity Holdings Limited (“BlueCity” or the “Company”) operates a platform for the LGBTQ community primarily under the BlueCity brand in China, India, Korea, Thailand, and Vietnam. On July 8, 2020, BlueCity conducted its IPO, issuing 5.3 million ADSs to the public at $16 per ADS (the “Offering Price”), for approximate proceeds of $78.86 million.
On December 2, 2020, BlueCity announced its unaudited financial and operating results for the third quarter of the Company’s fiscal year 2020, reporting, among other things, 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 4,349% year-over-year. On this news, BlueCity’s ADS price fell $3.30 per ADS, or 22.84%.
Then, on March 23, 2021, BlueCity issued a press release announcing its financial results for the fourth quarter of 2020, reporting additional increases, leading BlueCity’s ADS price to fall $3.25 per ADS, or 26.71% over the following two trading sessions.
A securities class action has been filed against BlueCity on behalf of shareholders that purchased BlueCity shares bin connection with the Company’s IPO on July 8, 2020. This case has been filed in the U.S. District Court for the Eastern District of New York.
The complaint filed alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: BlueCity’s business and financial prospects were overstated; BlueCity was ill-equipped to absorb the costs of becoming a publicly traded company; and BlueCity misrepresented its capability for sustainable growth.
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