February 18, 2021 - An investor in shares of EHang Holdings Limited (NASDAQ: EH) filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged violations of Federal Securities Laws by EHang Holdings Limited in connection with certain allegedly false and misleading statements made between December 12, 2019 and February 16, 2021.
China based EHang Holdings Limited operates as an autonomous aerial vehicle (AAV) technology platform company in the People's Republic of China, Europe, North America, West Asia, and internationally. EHang Holdings Limited reported that its annual Total Revenue rose from 66.48 million CNY in 2018 to 121.81 million CNY in 2019, and that its Net Loss declined from 79.11 million CNY in 2018 to 48.62 million CNY in 2019.
On February 16, 2021, a report was published entitled EHang: A Stock Promotion Destined to Crash and Burn. wherein the report detailed a series of allegedly alarming red flags about EHang. Specifically, the report, in its report summary, stated, We conclude that EH's relationship with its primary purported customer is a sham. Government records and credit reports show that EH's major customer is Shanghai Kunxiang Intelligent Technology Co. , further stating. We have gathered extensive evidence including behind-the-scenes photographs, recorded phone calls, and videos of on-site visits to EH's various facilities, as well as Kunxiang's offices which lead us to believe that Kunxiang signed sham sales contracts to benefit its investment stock price in EH.
Shares of EHang Holdings Limited (NASDAQ: EH) declined from $129.80 per share on February 12, 2021, to as low as $44.46 per share on February 16, 2021.
According to the complaint the plaintiff alleges on behalf of purchasers of EHang Holdings Limited (NASDAQ: EH) common shares between December 12, 2019 and February 16, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between December 12, 2019 and February 16, 2021, Ehang Holdings Limited made materially false and/or misleading statements and/or failed to disclose that the Company's purported regulatory approvals in Europe and North American for its EH216 were for use as a drone, and not for carrying passengers, that its relationship with its purported primary customer is a sham, that EHang Holdings Limited has only collected on a fraction of its reported sales since its ADS began trading on NASDAQ in December 2019, that the Company's manufacturing facilities were practically empty and lacked evidence of advanced manufacturing equipment or employees, and that as a result, the Company's public statements were materially false and misleading at all relevant times.