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Shares of the Chinese electric vehicle startup rose following the company’s statement that a lawsuit filed by the Government of Singapore Investment Corporation, claiming it inflated its revenue, is unfounded.
The company’s Hong Kong stock increased by 2.4%, trading at HKD50.45 (approximately USD6.50), after a 9% drop yesterday. In Singapore, shares climbed 3.2% by midday, rebounding from a 9.5% decline the previous day. In New York, the stock closed slightly higher, up 0.2% at USD6.83, after opening 7.8% lower.
This legal action is unrelated to recent business operations and originates from false claims made in a short-selling report published by Grizzly Research in June 2022, according to a company spokesperson based in Shanghai.
The GIC has filed a lawsuit in a New York court, alleging that the company’s management, including CEO Li Bin and former CFO Fang Wei, inflated revenue figures, leading to financial losses for the sovereign wealth fund. An independent committee, supported by international legal and forensic accounting firms, concluded in August 2022 that the report lacked factual accuracy, featuring numerous errors, baseless speculation, and misleading conclusions.
The company also responded to inquiries from the U.S. Securities and Exchange Commission regarding the report in September 2022, and after their response, the SEC took no further action.
Because the company is listed in New York, Hong Kong, and Singapore, its accounting practices are subject to review by three regulatory bodies, a knowledgeable source told reporters.
GIC purchased nearly 54.4 million American depositary shares in the company between August 2020 and July 2022. During this period, its stock saw significant volatility—peaking over USD19 in August 2020, reaching an all-time high of USD66.99 in January 2021, and dropping below USD20 in July 2022.
On the day the Grizzly Research report was released, the company’s New York stock dipped only 2.6%. The stock began a gradual decline in September 2022 amid challenging macroeconomic conditions and weaker-than-expected vehicle deliveries. By late December 2022, the share price hit a yearly low of USD9.80.
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