The Law Offices of Frank R. Cruz Reminds Investors of Looming Deadline in the Class Action Lawsuit Against DouYu International Holdings Limited (DOYU)

Published a year ago via Business Wire

The Law Offices of Frank R. Cruz reminds investors of the upcoming August 8, 2023 deadline to file a lead plaintiff motion in the class action filed on behalf of investors who acquired DouYu International Holdings Limited (“DouYu” or the “Company”) (NASDAQ: DOYU) securities between April 30, 2021 and May 9, 2023, inclusive (the “Class Period”).

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On March 29, 2022, after market hours, The Wall Street Journal published an article detailing new regulations being drafted by Chinese authorities regarding the country’s live-streaming industry, including plans to set a daily limit on how much money live-streamers can receive from fans, as well as tighter censorship over content, in an effort to “[exert] greater influence over the content consumed by its young people.” On this news, DouYu’s stock price fell $0.15, or 6.4%, to close at $2.21 per ADS on March 30, 2022, thereby injuring investors.

Then, on February 27, 2023, the Cyberspace Administration of China (“CAC”) released a statement in which it included DouYu in a list of platforms having “harmful information such a spreading pornographic drainage, vulgarity, [and] violent abuse.” The CAC claimed that “[in] order to solve the problem, [it would] continue to increase the crackdown on violations of laws and regulations, continue to do a good job in the work of ‘sweeping pornographic and illegal activities’ online, and effectively safeguard the people's online cultural rights and interests.” On this news, DouYu’s stock price fell $0.07, or 5.3%, to close at $1.25 per ADS on February 28, 2023.

Then, on May 8, 2023, after the markets closed, the CAC announced that “the State Internet Information Office instructed the Hubei Provincial Internet Information Office to send a working group to the DouYu platform to carry out a one-month centralized rectification supervision.” The following morning, May 9, 2023, before the market opened, DouYu issued a press release stating that the “CAC has sent an inspection team to the Company due to certain alleged violations of content rules and regulations on its platform. The CAC team is expected to conduct a one-month on-site inspection of the Company’s content platform, which DouYu will fully cooperate with. DouYu is also concurrently conducting a comprehensive internal review of its content monitoring system. As a platform committed to regulatory compliance and the safety of its user community, DouYu plans to implement all necessary remedial measures based on the CAC inspection and its own internal review. DouYu is expected to maintain its normal operations during this period of time.” On this news, DouYu’s stock price fell $0.098, or 9.3%, on May 9, 2023, thereby injuring investors further.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) The Chinese government, due to concerns about issues such as video game and computer addiction, as well as content challenging its authority, could become increasingly aggressive towards DouYu regardless of how effective or sincere its attempts to comply with Chinese law were; (2) This increasingly aggressive posture subjected DouYu to a heightened risk of an investigation and subsequent government enforcement action and ultimately resulted in enforcement action; and (3) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.

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If you purchased or otherwise acquired DouYu securities during the Class Period, you may move the Court no later than August 8, 2023 to request appointment as lead plaintiff in this putative class action lawsuit. To be a member of the class action you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the class action. If you wish to learn more about this class action, or if you have any questions concerning this announcement or your rights or interests with respect to the pending class action lawsuit, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007, by email to info@frankcruzlaw.com, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.

This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.

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