NEW YORK, May 19, 2020 /PRNewswire/ -- Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in DouYu International Holdings Limited ("DouYu" or the "Company") (NASDAQ:DOYU) of the May 26, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you invested in DouYu stock or options pursuant and/or traceable to the Company's July 16, 2019 IPO and would like to discuss your legal rights, click here:http://www.faruqilaw.com/DOYU. There is no cost or obligation to you.
You can also contact us by calling Richard Gonnello toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to[email protected].
CONTACT: FARUQI & FARUQI, LLP 685 Third Avenue, 26th Floor New York, NY 10017 Attn: Richard Gonnello, Esq. [email protected] Telephone: (877) 247-4292 or (212) 983-9330
The lawsuit has been filed in the U.S. District Court for the Central District of California on behalf of all those who purchased DouYu American Depository Shares ("ADSs") pursuant and/or traceable to the Company's July 16, 2019 Initial Public Offering ("IPO"). The case, Liang v. DouYu International Holdings Limited et al., Docket No. 2:20-cv-02747 was filed on March 24, 2020.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) DouYu's risks related to its top streamers had materialized, including that: (a) a top streamer was actively misrepresenting herself on DouYu's platform; and (b) the costs associated with retaining top streamers was swelling; (2) DouYu did not ensure that all of its products were fully compliant with current regulatory requirements before those products became available on line; and (3) key interactive features of DouYu's "lucky draw" were noncompliant with current regulatory requirements, requiring DouYu to remove them from operations, which negatively impacted user engagement activity and caused disappointing financial results.
On July 31, 2019, Mic.com also published a story, titled "Popular Chinese DouYu streamer revealed to be much older thanks to livestream glitch" (the "Mic Article"), on the glitch that revealed the true identity of Qiao Biluo whose DouYu users "fawned over the videos and photos that she uploaded . . ., which showed a young woman posing, playing games, and talking to the camera."
According to the Mic Article, "the revelation caused a considerable amount of drama, with many of her male subscribers expressing outrage that they had been tricked. They left the stream in droves, unsubscribed from her account and pulled donations."
On July 29, 2019, the day before the incident was first reported, DouYu ADSs closed at $10.08 per ADS. After the market absorbed all this information, on August 6, 2019, DouYu ADSs closed at $7.84 per ADS: a drop of $2.24 or 22.22%.
Then, on August 11, 2019, Bloomberg published an article from the South China Morning Post, profiling Liu Mou ("Liu"), a top streamer who plays exclusively on DouYu and purportedly contributed as much as 3% of DouYu's revenues in the second quarter of 2019 alone. In addition to explaining how DouYu lives and dies on virtual gifts from fans, with "[n]inety-one per cent of Douyu's revenue [coming] from virtual gifts" in the previous quarter, the article warned that "the cash burn on marketing and retaining top performers has caused investors to question the business model." [Emphasis added.] Using Liu as an example, the article noted how "Douyu pay[s] top gamers like Liu at least $4 million a year to retain them exclusively" and gives them half of whatever money was spent on "virtual gifts [bestowed upon them] from followers[.]"
On this news, the price of the Company's ADSs fell from $9.93 per share on August 12, 2019 to $8.84 per share on August 13, 2020: a $1.09 or 10.98% drop.
Then, on October 15, 2019, J.P. Morgan announced in an analyst report that DouYu had temporarily removed its "lucky draw feature in late Aug 2019," before "reinstat[ing]" it "on Oct 10," which, according to J.P. Morgan, "will cause its 3Q19 revenue to decline 1.5% QoQ . . ., 5% below the low end of company's 3Q19 guidance . . . and 7% lower than current Bloomberg consensus." [Emphasis added.] According to J.P. Morgan, which characterized the suspension of luck draw features as a "headwind."
On this news, the price of the Company's ADSs fell from $7.47 per share on October 15, 2019 to $7.12 per share on October 16, 2019: a $0.35 or 4.69% drop.
Finally, on November 27, 2019, DouYu released its third quarter 2019 financial results. During the Q&A portion of the earnings call held the same day, the Company addressed the temporary removal of its "lucky draw" features.
On this news, the price of the Company's ADSs fell from $7.84 per share on November 27, 2019 to $7.46 per share on November 28, 2019: a $0.38 or 4.85% drop.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding DouYu's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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