SAN DIEGO & BEIJING–(BUSINESS WIRE)–$BLCT #Shareholders–Shareholder rights law firm Robbins LLP announces that a purchaser of BlueCity Holdings Limited American depository shares (NASDAQ: BLCT) 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.
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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 American depository shares (“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.
If you purchased shares of BlueCity Holdings Limited American depository shares (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.
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