PDD Holdings Inc.

On March 21, 2023, Reuters reported that PDD’s Pinduoduo app had been suspended by Google for “security concerns, after malware issues were found on versions of the Chinese e-commerce app outside Google’s app store.” On this news, PDD’s stock price fell $3.35, or 4.2%, to close at $75.58 per share on March 22, 2023, thereby injuring investors.

Then, on March 27, 2023, Bloomberg reported that “[s]ecurity researchers . . . have identified and outlined potential malware in versions of [PDD’s] Chinese shopping app Pinduoduo, days after Google suspended it from its Android app store.” On this news, PDD’s stock price fell $2.28, or 3.1%, to close at $72.68 per share on March 27, 2023.

Then, on June 25, 2024, the Attorney General of Arkansas announced that he was suing PDD’s shopping app, Temu, for violations of the Arkansas Deceptive Trade Practices Act and the Arkansas Personal Information Protection Act, stating that Temu “is a data-theft business that sells goods online as a means to an end,” and that “[t]hough it is known as an e-commerce platform, Temu is functionally malware and spyware. It is purposefully designed to gain unrestricted access to a user’s phone operating system. It can override data privacy settings on users’ devices, and it monetizes this unauthorized collection of data.” On this news, PDD’s stock price fell $8.06, or 5.8%, over two consecutive trading days to close at $131.94 per share on June 27, 2024, thereby injuring investors further.

The complaint filed in this class action alleges that 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 that: (1) PDD’s applications contained malware, which was designed to obtain user data without the user’s consent, including reading private text messages; (2) PDD has no meaningful system to prevent goods made by forced labor from being sold on its platform, and has openly sold banned products on its Temu platform; (3) the foregoing subjected the Company to a heightened risk of legal and political scrutiny; and (4) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.