Updated January 9th, 2024 at 08:57 IST
JD.Com's Dada Nexus uncovers 'suspicious practices' in internal audit
The revelation had a significant impact on Dada's market performance, with shares plunging as much as 49.5% to $1.59 on Monday.
Dada Nexus internal audit: China's e-commerce giant, JD.Com, disclosed that its subsidiary, Dada Nexus, has identified "certain suspicious practices" during an internal audit, raising concerns about the accuracy of the unit's online advertising, marketing services revenues, and operation costs.
In a separate statement, Dada Nexus revealed that approximately $70 million of revenues from online advertising and marketing services may have been overstated for the first three quarters of 2023. Additionally, an estimated 500 million Yuan of operations and support costs may also have been inaccurately reported, although no further details were provided.
The revelation had a significant impact on Dada's market performance, with shares plunging as much as 49.5 per cent to $1.59 on Monday. This marks the lowest and most substantial daily percentage decline since its debut in June 2020. The repercussions were also felt in JD.Com's Hong Kong shares, which fell as much as 1.2 per cent on Tuesday morning, following a 2.7 per cent drop in its US shares the previous day.
In response to the findings, JD.Com announced that Dada Nexus will conduct an independent review, assisted by independent professional advisers, to thoroughly investigate the identified discrepancies.
This unexpected development raises concerns about transparency and financial governance within the e-commerce group, as investors await the results of the independent review to gauge the impact on JD.Com's overall financial health and reputation.
(With Reuters inputs.)
Published January 9th, 2024 at 08:57 IST