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JD.com’s on-demand delivery unit, Dada Nexus, loses 46 per cent of US stock value overnight amid internal inquiry into potential fraud
- A routine internal audit at Dada found US$140 million worth of questionable revenue and costs in the firm’s books for the first three quarters of 2023
- Shanghai-based Dada has reported the potential case of fraud to police, according to local media
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Ben Jiangin Beijing
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.
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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.
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.
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