SAN DIEGO–(BUSINESS WIRE)–The class: Shareholder rights law firm Robbins LLP is advising investors that a shareholder has filed a class action lawsuit on behalf of all persons or entities who purchased Tuya, Inc. (NYSE: TUYA) American Depository Shares ( “ADS”) in March 2021 of the company’s initial public offering (“IPO”), for violation of the Securities Act of 1933. Tuya has developed and offers an “Internet of Things” (“IoTs”) cloud platform ) purpose-built software that offers a suite of offerings, including Platform-as-a-Service, or PaaS, and Software-as-a-Service, or SaaS, to enterprises and developers. The Company’s proprietary products and services enable so-called “smart” devices, for example, household items and Internet-connected devices, to communicate and interact with end users and online information and services.
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What this case is about: Tuya, Inc. (TUYA) deceived investors in connection with the company’s IPO
According to the complaint, the offering documents in support of the IPO contained misrepresentations of material facts. Prior to the IPO, Tuya claimed to be experiencing phenomenal growth. Tuya claimed to be the “largest IoT PaaS company in the global IoT PaaS market by volume of powered smart devices” and said its “business ha[d] scaled rapidly in recent periods,” growing revenue 70% year-over-year to $179.9 million in 2020.
Tuya held its IPO in March 2021, selling over 45 million ADSs at $21 per ADS. However, unbeknownst to investors, a significant portion of Tuya’s China-based customers engaged in widespread illicit activities to deceptively promote and sell their products on e-commerce marketplaces such as Amazon.com. Many of Tuya’s most prominent customers engaged in the systematic practice of writing fake reviews and paying for positive reviews, in direct violation of Amazon.com seller policies and practices. The manipulation of ratings by a large portion of Tuya’s customer base posed a significant undisclosed risk that Amazon.com would end or limit the sale of products containing Tuya’s technology on its platform, which would have a significant negative impact. on the company’s financial results. Additionally, on March 1, 2021, more than two weeks before the IPO, a data security organization, Safety Detectives, had recovered a database that exposed 13 million records of organized fake scams linked to more than 200,000 Amazon account profiles, many of which involved Tuya’s customers.
On May 11, 2021, it was reported that “several major Chinese sellers disappeared from Amazon”. The article noted that the “suspended accounts have contributed over $1 billion in gross merchandise value (GMV) to Amazon.” Then, on July 9, 2021, it was reported that Amazon had “closed 340 online stores of one of its largest Chinese retailers in the first half of this year” as it cracks down on paid reviews and d Other Violations of Amazon’s Terms of Service. Over the next few weeks, Amazon banned hundreds of Chinese brands on thousands of seller accounts, many of whom were Tuya customers. Amazon said these sellers knowingly, repeatedly, and materially violated Amazon’s Seller Policies, particularly those regarding review abuse.
Finally, Tuya announced its financial results for the second quarter of 2021 and a disappointing outlook for the third quarter of 2021. By August 2022, Tuya ADS had fallen below $2 per ADS, or 90% below the price at which they were been sold to the investor. Public.
Next steps: If you acquired shares of Tuya, Inc. as part of the company’s IPO, you have until October 11, 2022, to ask the court to name you as lead plaintiff in the class. A lead plaintiff is a representative party acting on behalf of other class members to direct litigation. You don’t have to be in the case to be eligible for a clawback.
All representation is done on a contingent fee basis. Shareholders do not pay any fees or expenses.
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About Robbins LLP: A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP are dedicated to helping shareholders recoup losses, improving corporate governance structures and holding corporate executives responsible for their wrongdoings since 2002. To be notified if a class action lawsuit against Tuya, Inc. or to receive free alerts when corporate executives commit wrongdoing, sign up for Stock Watch today.
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