A securities class action was recently filed against iDreamSky Technology Limited.
Based in China, iDreamSky is the largest independent mobile game publishing platform in the nation, in terms of its total number of users. A report from Analysis International supplied figures on this user base. The company, whose shares trade on the Nasdaq Global Select Market, held an initial public offering Aug. 7, 2014.
Glancy Binkow suit
On April 2, 2015, Glancy Binkow & Goldberg LLP filed a lawsuit representing a class of investors. This class consisted of shareholders who came to own the company’s American Depositary Shares pursuant to the registration and prospectus issued by iDreamSky in connection with its IPO held on or around Aug. 7, 2014, as well as investors who bought ADSs on the open market between Aug. 8, 2014, and March 13, 2015. These dates are inclusive, and represent the class period.
This securities class action, brought forth in the United States District Court for the Southern District of New York, claimed that defendants made statements that were false and or misleading, and also neglected to reveal several key matters. Because of these actions, many statements made by iDreamSky were made without a reasonable basis and or were materially false and misleading.
Robbins Arroyo suit
On April 7, 2015, Robbins Arroyo LLP announced that an iDreamSky investor had filed a securities fraud class action complaint in the same federal court where the Glancy Binkow suit was brought forth. According to the legal claim brought forth by the aforementioned shareholder, the company, along with certain directors and officers, breached both the Securities Exchange Act of 1933 and Securities Exchange Act of 1934 between Aug. 8, 2014, and March 13, 2015.
The lawsuit contended that during the aforementioned class period, the independent mobile game publishing platform made statements about its business, prospects and operations that were materially false and misleading. In addition, the firm neglected to disclose facts that were both important and adverse. When the company revealed these previously-concealed challenges, markets reacted by causing ADSs to suffer a sharp decline.
According to the Glancy Binkow suit, iDreamSky failed to reveal, and or made statements that were false or misleading, regarding several key matters:
1) The company allegedly failed to reveal that it had previously exaggerated how easily it could integrate its distribution channels and leverage its user base to generate money.
2) Because of the aforementioned, the independent mobile game publishing platform was forced to reduce its earnings guidance.
3) Due to the above matters, iDreamSky’s statements about its operations, business and prospects either lacked a reasonable basis and or were materially false and misleading.
“iDreamSky ADSs plunged more than 33 percent.”
After the close of trading on March 13, 2015, the company reduced its revenue guidance for the fourth quarter of 2014 by $9.9 million to $53 million. When explaining the shortfall, the firm pointed to a postponed release of one popular game – which was launched on one of the company’s distribution platforms – and also revenues from a separate game that fell short of expectations.
When markets found out, iDreamSky ADSs plunged more than 33 percent to close at $7.22 each. This decline took place amid unusually high trading volume.
What investors should know
If eligible shareholders are interested in learning more about these legal matters, they can contact Casey Sadler or Lesley Portnoy of Glancy Binkow. In addition, investors who want to serve as lead plaintiff have until June 1, 2015, to move the court.
Shareholders interested in speaking with Robbins Arroyo can learn more about the securities class action filed by the firm by reaching out to Darnell Donahue through phone or email, or by filling out the shareholder information form on the law firm’s website.