An investor in shares of Ruhnn Holding Limited (NASDAQ: RUHN) filed a lawsuit over alleged violations of Securities Laws by Ruhnn Holding Limited in connection with certain allegedly false and misleading statements made in connection with the April 2019 initial public offering.
On or about April 3, 2019, Ruhnn sold 10 million shares of stock in its initial public stock offering (the IPO ), at $12.50 a share raising $125,000,000 in new capital. However, since the IPO, Ruhnn stock has plummeted, on August 22, 2019, the stock closed at $4.50.
On June 13, 2019, Ruhnn Holding Limited announced its fourth quarter and fiscal year 2019 financial results. Ruhnn Holding Limited reported that its annual Total Revenue rose from 947.58 million RMB for the 12 months period that ended on March 31, 2018 to over 1.09 RMB billion for the 12 months period that ended on March 31, 2019 and that its Net Loss declined from 104 million to 73.24 million over those respective time periods.
Shares of Ruhnn Holding Limited (NASDAQ: RUHN) declined to as low as $3.06 per share on June 3, 2019.
On September 9, 2019, NASDAQ: RUHN shares closed at $4.45 per share.
The plaintiff alleges that the Registration Statement that was filed in connection with the IPO was negligently prepared and, as a result, contained untrue statements of material fact, omitted material facts necessary to make the statements contained therein not misleading, and failed to make adequate disclosures required under the rules and regulations governing the preparation of such documents.
More specifically, the plaintiff claims that the Registration Statement highlighted a dramatic growth in Ruhnn’s net revenues derived from its full-service model, but failed to disclose that it had already shuttered almost 40% of its online stores in the fourth quarter of 2019, which ended March 31, 2019 and preceded the IPO.
Furthermore, the plaintiff alleges among other things that the Registration Statement failed to disclose that by the time of the IPO the Company’s net revenues from its full service model had already declined 46% on a sequential basis to RMB186.9 million in the fourth quarter of 2019, which also represented an anemic 1.4% quarterly growth rate on a year-over-year basis.