A lawsuit was filed on behalf of investors in Cloopen Group Holding Limited (NYSE:RAAS) shares over alleged securities laws violations.
San Diego, CA -- (SBWIRE) -- 01/19/2022 -- An investor, who purchased shares of Cloopen Group Holding Limited (NYSE: RAAS), filed a lawsuit over alleged violations of Federal Securities Laws by Cloopen Group Holding Limited.
Investors who purchased shares of Cloopen Group Holding Limited (NYSE: RAAS) have certain options and for certain investors are short and strict deadlines running. Deadline: February 8, 2022. NYSE: RAAS investors should contact the Shareholders Foundation at firstname.lastname@example.org or call +1(858) 779 - 1554.
China based Cloopen Group Holding Limited, through its subsidiaries, provides cloud-based communications solutions in the People's Republic of China. Cloopen Group Holding Limited conducted its initial public stock offering (the "IPO") in February 2021. Cloopen Group Holding Limited sold 20 million ADS at $16.00 per share, for a total offering size of $320 million.
According to the complaint the plaintiff alleges on behalf of all persons who purchased or otherwise acquired Cloopen Group Holding Limited (NYSE: RAAS) American Depositary Shares ("ADSs") pursuant and/or traceable to the registration statement and prospectus issued in connection with the Company's February 2021 the IPO and/or purchased or otherwise acquired Cloopen securities between February 9, 2021 and May 10, 2021, that the defendants violated Federal Securities Laws.
More specifically, the plaintiff claims that the Registration Statement led Cloopen Group Holding Limited ADS purchasers to believe that the Company's much-touted growth strategy, which relied upon cross-selling, up-selling, optimizing existing solutions, and developing new features, was effective. Indeed, as portrayed in the Registration Statement, the complaint alleges that Cloopen Group Holding Limited appeared to be retaining and even expanding its customer base, as well as maintaining its key sales metrics such as dollar-based net retention rate, which reflected its ability to increase existing customer revenue.
The plaintiff further alleges that the Registration Statement failed to disclose that an increasing number of Cloopen Group Holding Limited 's customers were refusing to pay, forcing the Company to record massive increases in its accounts receivables and allowance for doubtful accounts. The Registration Statement also allegedly failed to disclose that Cloopen Group Holding Limited was weighed down by huge liabilities related to the fair value of certain recently-granted warrants.
On March 26, 2021 Cloopen Group Holding Limited reported its 4Q 2020 and FY 2020 financial results, which closed on December 31, 2020. Cloopen Group Holding Limited reported 4Q 2020 revenues of $39.6 million, $2 million shy of analysts' consensus, net losses of $46.8 million, representing a staggering 466.9% increase year-over-year, and operating expenses of $27.6 million, representing a 30% increase over 4Q 2019. Cloopen Group Holding Limited blamed a "change in fair value of warrant liabilities of . . . US$34.4 million" for its net loss and "an increase in the provision for doubtful accounts resulting from increased in accounts receivables" for the 59.2% increase in general and administrative expenses.
The complaint further alleges that thereafter Cloopen Group Holding Limited 's most senior officers continued to make materially false and misleading statements to the market and failed to reveal the true extent of Cloopen's troubles.
The plaintiff claims that in the March 26, 2021 earnings announcement and investor conference call, Cloopen Group Holding Limited 's senior executives continued to misrepresent the Company's expansion strategy, again failing to acknowledge that the strategy was failing and its existing customer base was deteriorating; nor did they disclose that Cloopen's dollar-based net retention rate had tumbled in 4Q 2020.
The plainitff alleges that weeks later, as Cloopen Group Holding Limited belatedly revealed additional facts about its failed growth strategy and withering customer base, including that its dollar-based net retention rate by year end 2020 fell far below historical periods.
Those who purchased shares of Cloopen Group Holding Limited (NYSE: RAAS) have certain options and should contact the Shareholders Foundation.
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