RLX Technology Inc.
|Company Name||RLX Technology Inc.|
|Class Period||January 22, 2021 to June 02, 2021|
|Lead Plaintiff Motion Deadline||August 09, 2021|
RLX purports to be the “No. 1 branded e-vapor company in China,” which the Company claims is its “largest potential market.”
In January 2021, RLX conducted its IPO, selling approximately 116.5 million ADSs) at $12 per ADS, raising approximately $1.4 billion in gross proceeds.
On March 22, 2021, China’s Ministry of Industry and Information Technology posted draft regulations confirming that e-cigarettes and new tobacco products would be regulated similar to traditional tobacco offerings.
On this news, RLX’s share price fell $9.31, or 48%, to close at $10.15 per share on March 22, 2021, thereby injuring investors.
Then, on June 2, 2021, the Company announced its first quarter 2021 financial results, reporting only a 48% increase in net revenues quarter over quarter, and second quarter guidance suggesting that its gross margin would “remain steady.”
On this news, RLX’s share price fell $0.97, or nearly 9%, to close at $9.90 per share on June 4, 2021, thereby damaging investors further. The Company’s shares have traded as low as $7.89 per ADS, or 32% below the IPO price.
The complaint alleges that Defendants overstated certain financial metrics and failed to disclose that these metrics were not indicative of future financial performance since regulators in China were already working on a national standard for e-cigarettes that would regulate them either under the same rules or in the same manner as ordinary cigarettes.
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