The Shock and the Fall
JD.com unit Dada Nexus (NASDAQ:DADA) experienced a stunning 26% premarket plunge when the company disclosed that it had uncovered suspicious practices in a routine audit, prompting a significant revision of its revenue guidance.
“In the course of its routine internal audit, certain suspicious practices were identified that may cast doubt on certain revenues from the Company’s online advertising and marketing services in 2023,” Dada Nexus revealed in a filing on Monday.
The company estimated that approximately RMB500 million of revenues from online advertising and marketing services and RMB500 million of operations and support costs could have been overstated for the first three quarters of 2023, leading to a loss of confidence in prior revenue guidance.
The audit committee of the company’s board decided that an independent review was imperative to gauge the financial impact and scope of the suspicious practices.
Dada Nexus (DADA) short interest is 4.5%.