NEW YORK, May 20, 2020 /PRNewswire/ -- Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in GSX Techedu Inc. ("GSX" or the "Company") (NYSE:GSX) of the June 16, 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 GSX stock or options between June 6, 2019 and April 13, 2020 and would like to discuss your legal rights, click here: www.faruqilaw.com/GSX. 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]
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The lawsuit has been filed in the U.S. District Court for the District of New Jersey on behalf of all those who purchased GSX securities between June 6, 2019 and April 13, 2020 (the "Class Period"). The case, Wu v. GSX Techedu Inc. et a.l, No. 1:20-cv-04457 was filed on April 17, 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) GSX overstated its profitability, revenue, student enrollment figures, teacher qualifications, and teacher selection process; (2) the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company's financial results; and (3) as a result, the Company's public statements were materially false and misleading at all relevant times.
On February 25, 2020, Grizzly Research LLC ("Grizzly") published a report highlighting multiple alleged issues with GSX's business and financial operations (the "Grizzly Report"). Specifically, the Grizzly Report alleged, among other issues, that the Company "has been drastically overstating its profitability in its US public filings, especially for 2018"; Grizzly "found multiple strong indications of past and current order 'brushing,'" which are "essentially fake student enrollments to boost student count"; "many of GSX's reported students do not actually exist"; and "[w]hile [GSX] touts its high-quality teacher recruitment mechanism, [Grizzly] found a sign-up website that was not functional, multiple allegations of GSX hiring teachers right out of college with no prior experience, and fabricated teachers profiles."
On this news, the price of the Company's American Depository Shares ("ADS") fell from $45.42 per share on February 24, 2020 to $44.09 per share on February 25, 2020: a $1.33 or 2.93% drop.
Then, on April 14, 2020, Citron Research ("Citron") published a report highlighting additional alleged issues with GSX's business and financial operations (the "Citron Report"), including, among other issues, that the Company's "2019 revenue was overstated by 70%," that "sales revenues are largely exaggerated," and that the Company's "filings are riddled with suspicious transactions."
On this news, the Company's ADS price fell from $31.40 per share on April 13, 2020 to $31.20 per share on April 14, 2020: a $0.20 or 0.64% 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 GSX's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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