The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of investors that acquired X Financial (X Financial or the Company) (NYSE: XYF) American Depositary Shares (ADSs) pursuant and/or traceable to the Company’s September 19, 2018 initial public offering (IPO or the Offering). X Financial investors have until February 7, 2020 to file a lead plaintiff motion.
If you are a shareholder who suffered a loss, click here to participate.
In September 2018, the Company completed its IPO selling 11.7 million ADSs at $9.50 per ADS.
On November 19, 2018, X Financial announced its third quarter 2018 financial results, reporting that its delinquency rate for loans was 3.51%, or more than a 40% increase from the prior quarter.
Then, on May 21, 2019, X Financial acknowledged that it was unlikely to achieve significant loan or revenue growth because its preferred loan business had failed over the last year and that it would shelve the entire business.
As of November 22, 2019, X Financials shares have traded as low as $1.74 per share, or 81% below the IPO price of $9.50 per share.
The complaint filed in this class action alleges that Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Companys business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company’s total loan facilitation amount was not growing, but rather was contracting; (2) that the number of investors actively using X Financial’s platform was shrinking; (3) that demand from small- and medium-sized enterprises for the Company’s preferred loans was plummeting; (4) that the Company’s preferred loans had performed so poorly that it had begun drastically scaling back its preferred loans in the first quarter of 2018, several months before the IPO, and was in the process of phasing out such loans completely; (5) that demand for the Company’s card loans was also plummeting; (6) that the revenue and loan facilitation growth provided in the registration statement leading up to the IPO was achieved by relaxed credit and due diligence standards, under which the Company had underwritten tens of millions of dollars’ worth of poor quality loans that suffered from a disproportionately high risk of default as compared to the Company’s earlier loan vintages; (7) that the Company was suffering from accelerated delinquency rates from poor quality loans that it had underwritten in the first, second, and third quarters of 2018, which had caused the Company’s delinquency rate to sharply rise; (8) that the Company’s product mix had significantly deteriorated; (9) that the Company’s net revenue was on track to decline by 22% during the third quarter of 2018; and (10) that as a result, the IPO Registration Statement was materially false and/or misleading and failed to state information required to be stated therein.
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If you purchased X Financial securities during the Class Period, you may move the Court no later than February 7, 2020 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased X Financial securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007, by email to [email protected], or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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