|Company name||GSX Techedu, Inc.|
|Status||Class Action Complaint Filed|
NEW YORK, May 20, 2020–Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, announces that a class action lawsuit has been filed in the United States District Court for the District of New Jersey on behalf of investors that purchased GSX Techedu, Inc. (NYSE: GSX) securities between June 6, 2019 and April 13, 2020 (the “Class Period”). Investors have until June 16, 2020 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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.”
Following publication of the Grizzly Report, GSX’s share price fell $1.33 per share, or 2.93%, to close at $44.09 per share on February 25, 2020.
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.”
Following the publication of the Citron Report, GSX’s share price fell $0.20 per share, or 0.64%, to close at $31.20 per share on April 14, 2020.
The complaint, filed on April 17, 2020, alleges that throughout the Class Period defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) GSX overstated its profitability, revenue, student enrollment figures, teacher qualifications, and teacher selection process; (ii) the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company’s financial results; and (iii) as a result, the Company’s public statements were materially false and misleading at all relevant times.
If you purchased GSX shares during the Class Period and suffered a loss, have information, 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 Melissa Fortunato or Marion Passmore by email at firstname.lastname@example.org, telephone at (212) 355-4648, or by filling out the contact form below. There is no cost or obligation to you.