NEW YORK, Sept. 21, 2020 /PRNewswire/ — Pomerantz LLP announces that a class action lawsuit has been filed against Qutoutiao, Inc. (“Qutoutiao” or the “Company”) (NASDAQ: QTT) and certain of its officers. The class action, filed in United States District Court for the Southern District of New York, and docketed under 20-cv-07717, is on behalf of a class consisting of all persons and entities that: (a) purchased or otherwise acquired Qutoutiao American Depositary Shares (“ADSs”) pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the Company’s September 2018 initial public offering (“IPO” or the “Offering”); and/or (b) purchased or otherwise acquired Qutoutiao securities between September 14, 2018, and July 15, 2020, inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who: (a) purchased or otherwise acquired Qutoutiao American Depositary Shares (“ADSs”) pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the Company’s September 2018 IPO; and/or (b) purchased or otherwise acquired Qutoutiao securities between September 14, 2018, and July 15, 2020, you have until October 19, 2020, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
Qutoutiao offers a mobile application called Qutoutiao (which means “fun headlines” in Chinese) that aggregates articles and short videos from professional media and freelancers and presents customized feeds to users.
On September 14, 2018, the Company filed its prospectus on Form 424B4 with the SEC, which forms part of the Registration Statement. In the IPO, the Company sold 13.8 million ADSs at a price of $7.00 per share. The Company received proceeds of approximately $85.8 million from the Offering, net of underwriting discounts and commissions. The proceeds from the IPO were purported to be used for expanding and enhancing the Company’s content offerings, for product development and technology infrastructure, and for general corporate purposes, including marketing and promotion of its products and branding and potential acquisitions and investments.
The Complaint alleges that in the Registration Statement and 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: (i) that Qutoutiao replaced its advertising agent with a related party, thereby bypassing third-party oversight of the content and quality of the advertisements; (ii) that the Company placed advertisements on its mobile app for products whose claims could not be substantiated and thus were considered false advertisements under applicable regulations; (iii) that, as a result, the Company would face increasing regulatory scrutiny and reputational harm; (iv) that, as a result, the Company’s advertising revenue was reasonably likely to decline; and (v) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On December 10, 2019, Wolfpack Research (“Wolfpack”) published a report, alleging, among other things, that the Company had overstated its revenues by recording non-existent advances from advertising customers. Moreover, the report alleged that Qutoutiao replaced its third-party advertising agent with a related party, thereby bypassing the agent’s oversight and allowing the Company to “perpetrate the unmitigated ad fraud that [Wolfpack] observed in [its] sample.”
On this news, the Company’s ADS price fell $0.12 per share, or approximately 4%, to close at $2.86 per share on December 11, 2019.
On July 15, 2020, hosts of a consumer rights gala stated that Qutoutiao had allowed ads on its platform promoting exaggerated or impossible claims from weight-loss products. For example, one such ad offered free weight-loss products valued at $14,300 that would help users lose more than 30 pounds a month.
On this news, the Company’s ADS price fell $0.85 per share, or approximately 23%, to close at $2.84 per share on July 16, 2020.
On July 17, 2020, Chinese media reported that Qutoutiao’s app had been removed from domestic Android app stores.
By the commencement of this action, Qutoutiao’s ADSs last closed at $2.42 per share on September 17, 2020, representing a 65.43% decline from the $7.00 per share IPO price.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
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SOURCE Pomerantz LLP