73 views 4 mins 0 comments

JD.com’s on-demand delivery unit, Dada Nexus, loses 46 per cent of US stock value overnight amid internal inquiry into potential fraud

In Business
January 09, 2024
An on-demand delivery firm affiliated with Chinese e-commerce giant JD.com lost 46 per cent of its stock value in New York on Monday, following an inquiry into “suspicious” data during an internal audit, dealing a fresh blow to confidence in China’s tech stocks.
Dada Nexus, which operates JD Daojia and Dada Now, found 1 billion yuan (US$140 million) worth of questionable revenue and costs in its books for the first three quarters of 2023 during a routine internal audit, according to its corporate filing. Parent JD.com’s share price tumbled 3 per cent on Tuesday in Hong Kong.

Nasdaq-listed Dada said an estimated 500 million yuan of online advertising and marketing service revenue plus another 500 million yuan of operations and support costs for the first three quarters of 2023 may have been overstated.

While the amount that is subject of the inquiry makes up just about a third of Dada’s total revenue in the September quarter, a potential fraud in the company’s books could further undermine investor confidence in Chinese internet stocks.
Dada Nexus chairman Xin Lijun stepped down from his post “for personal reasons” on December 19, 2023. That came more than a month after he was removed as chief executive of JD Retail in November. Photo: Bloomberg
The investigation at Dada comes nearly a month since the company’s chairman, Xin Lijun, stepped down from his post “for personal reasons” effective on December 19. In that same corporate announcement of management changes at Dada, Chen Zhaoming resigned as the firm’s chief financial officer.
Shanghai-based Dada, according to a report by Chinese news outlet The Paper, has reported the potential fraud case to local police.

A JD.com representative referred the South China Morning Post to Dada’s US filing and declined to provide further details. Dada did not immediately respond to a request for comment on Tuesday.

Dada had earlier said it was working with third-party agencies, including an accounting company and a law firm, to conduct an independent review of the case.

In separate filings with regulators, both JD.com and Dada said they are committed to maintaining high corporate-governance standards and internal controls.

Chinese e-commerce giant JD.com wins antitrust lawsuit against Alibaba

Founded in Shanghai in 2014, Dada runs two core businesses: parent JD.com’s on-demand retail platform JD Daojia and its own Dada Now. Both these operations work with bricks-and-mortar retailers and merchants on fulfilment, including delivery of online orders to consumers in under roughly an hour.

JD Daojia operates in more than 1,700 counties, districts and cities across mainland China, while Dada Now does business in 2,700 domestic locations.

In November, Dada reported that total third-quarter revenue rose 20.4 per cent year on year to 2.9 billion yuan.

On-demand delivery is a hotly contested field on the mainland, where Dada competes against the likes of food delivery giant Meituan and JD.com rival Alibaba Group Holding, which owns the Post.

The news is published by EMEA Tribune & SCMP210520-twitter-verified-cs-70cdee.jpg (1500×750)Follow our WhatsApp verified Channel 

Support Independent Journalism with a donation (Paypal, BTC, USDT, ETH)
whatsapp channel
/ Published posts: 46214

The latest news from the News Agencies