A RELX e-cigarette store in Yichang, Hubei Province, China.
Just five months after a blockbuster IPO on the New York Stock Exchange that turned four of its co-founders into billionaires, Chinese steam giant RLX Technology was hit by at least four class action lawsuits alleging the company was taking the risks to investors in its original Filing got underestimated with the US Securities and Exchange Commission. The spate of announcements – the first lawsuit was filed on June 9 by a single investor, followed by multiple law firms including shareholder lawyers Schall Law Firm and Kessler Topaz Meltzer & Check – came at the same time as the firm’s share price fell at 18 % since the beginning of the month, which reduced RLX founder Kate Wang’s net worth by nearly $ 600 million to an estimated $ 2.9 billion on Monday afternoon. RLX stock traded at $ 9.42 per share at 2 p.m. ET on Monday, down from $ 29.51 per share on the day it went public. e liquid for e smoker found online.
It’s been a tumultuous year for the three-year company, which Wang said launched in 2018 to get their chain-smoking father to quit. When RLX went public on Jan. 22, Wang had an estimated net worth of $ 9.1 billion. Her co-founders David Jiang (then $ 4.2 billion), Wen Yilong ($ 2.7 billion) and Du Bing ($ 1.2 billion) also entered the billionaire ranks for the first time. Two months later, the Chinese government released draft regulations regulating e-cigarettes as tobacco products – a move that could potentially bring them under the state monopoly of only selling cigarettes, which would dampen or even eliminate RLX’s core market – and The shares fell, reducing Wang’s net worth by more than 40% to $ 3.4 billion. Since going public, the four co-founders have collectively lost nearly $ 12 billion in the value of their RLX shares. David Jiang now has an estimated net worth of $ 1.3 billion, while Wen and you have dropped out of the three-point club.
The proposed tobacco rules are at the heart of the lawsuits filed against the company. The lawsuits allege that RLX’s initial registration document did not warn investors of the risks posed by Chinese regulators. A lawsuit filed by the Portnoy law firm alleges that “RLX knew, or had information that was foreseeable, that China was moving forward in adopting a national e-cigarette standard that is likely to affect RLX’s performance . “
It is not clear that these lawsuits are based on very strong claims related to Chinese regulations. In its filing with the SEC, RLX listed 50 pages of potential risks for investors, including how new e-cigarette regulations in China could have “material and adverse effects” on the company’s business.
Another claim in the lawsuits focuses on the company’s financial data, arguing that RLX overstated its success and used forecast numbers instead of real sales. RLX released its first quarter results on June 2, showing revenue increased 48% from the previous quarter to $ 366 million, a significant slowdown from its 147% growth in 2020. RLX posted a net loss of $ 20 million on 2020 sales of $ 585 million. best e cigarette on the market to be bought.
“We are aware that a US securities lawsuit has been filed against us in a US court. The company believes the allegations are unfounded, “a spokesman for RLX told Forbes in a statement. “We have hired US attorneys to vigorously defend these and related claims and protect the company’s rights.”