GigaCloud Technology Inc.

In August 2022, GigaCloud conducted its IPO, selling 3,381,000 Class A ordinary shares at $12.25 per share, receiving net proceeds of approximately $34.2 million.

On September 28, 2023, before the market opened, Culper Research published a report alleging “numerous glaring flaws” in GigaCloud’s public reporting. For example, the Report stated that while GigaCloud “claims to run 14 U.S. warehouses,” the Company “discloses just 73 employees in the entire U.S., implying just 5 employees per warehouse.” The Report also alleged that “GigaCloud’s marketing materials utilize photoshopped stock photos to portray itself as a highly efficient, growing operation,” but that Culper Research’s investigators visited some of the Company’s warehouses and discovered little activity. Further, the Report alleges that Culper Research uncovered “numerous entities which are neither named subsidiaries nor disclosed as GCT related parties” whose conduct at the very least “suggests undisclosed related party issues.” 

On this news, the Company’s share price fell $1.78, or 18%, to close at $7.69 per share on September 28, 2023, on unusually heavy trading volume. By the commencement of this action, GigaCloud’s shares have closed as low as $4.27 per share, a 65% decline from the $12.25 per share IPO price.  

The complaint filed in this class action 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: (1) that the Company’s business is a fraction of what it publicly claims, as evidenced by staffing and activity levels at its warehouses; (2) that the Company overstated its last-mile operations; (3) that the Company engaged in undisclosed related party transactions; (4) that, as a result, the Company’s financial results were overstated; (5) 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.