Dada Nexus Reports Revenue Overstated, President Resigns

Dada Nexus Limited DADA filed documents with the SEC late Tuesday following the completion of an independent review. Here’s a look at the details.

What To Know:

According to the SEC filings, Mr. Jeff Huijian He, who formerly served as the company's president and director, is stepping down, and Mr. Bing Fu will serve as the interim president. 

Also, according to the documents, Dada Nexus reported certain revenues and associated costs were overstated in past financial statements. 

"Specifically, the company's net revenues were overstated by approximately RMB 69 million in the fourth quarter of 2022, RMB 40 million in the first quarter of 2023, RMB 214 million in the second quarter of 2023, and RMB 245 million in the third quarter of 2023, respectively," the company's filing stated. 

"The Company's operations and support costs were overstated by approximately RMB70 million in the fourth quarter of 2022, RMB42 million in the first quarter of 2023, RMB214 million in the second quarter of 2023, and RMB250 million in the third quarter of 2023, respectively," according to the filing. 

New Street Research analyst Jin Yoon downgraded Dada Nexus from Buy to Neutral and announced a $2 price target on Wednesday. 

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DADA Stock Prediction 2024:

Equity research analysts on and off Wall Street typically use earnings growth and fundamental research as a form of valuation and forecasting. But many in trading turn to technical analysis as a way to form predictive models for share price trajectory.

Some investors look to trends to help forecast where they believe a stock could trade at a certain point in the future. Looking at Dada Nexus, an investor could make an assessment about a stock's long term prospects using a moving average and trend line. If they believe a stock will remain above the moving average, which many believe is a bullish signal, they can extrapolate that trend into the future using a trend line. For Dada Nexus, the 200-day moving average sits at $4.10, according to Benzinga Pro, which is above the current price of $2.56. For more on charts and trend lines, see a description here.

Traders believe that when a stock is above its moving average, it is a generally bullish signal, and when it crosses below, it is a more negative signal. Investors could use trend lines to make an educated guess about where a stock could trade at a later date if conditions remain stable.

DADA Price Action: According to Benzinga Pro, Dada Nexus shares are up 28.7% at $2.53 at the time of publication.

Image: Jacqueline Macou from Pixabay