OPINION This is a class action alleging violations of Section 11, 12(a) and 15 of the Securities Act of 1933 (the “Securities Act”), based upon purported misrepresentations and omissions in the offering documents of Missfresh Ltd. (“Missfresh”). Missfresh is a Chinese grocery delivery company that held an initial public offering of its American Depository Shares (“ADS”) in June 2021. Plaintiffs’ amended complaint identifies three categories of purported misstatements and omissions in the offering documents that they contend are actionable. First, plaintiffs challenge certain financial information that was subsequently restated. Specifically, following the IPO, Missfresh publicly acknowledged that the offering documents overstated net revenues and sales through online platforms for the quarter immediately preceding the offering by approximately 10 percent. Second, plaintiffs claim that defendants were obligated to disclose certain internal control deficiencies that allegedly led to the aforementioned accounting restatement, and violated the Securities Act by failing to do so. Third, over a year after the IPO, Missfresh was forced to shut down its distributed mini warehouse delivery business and next-day delivery business, which collectively accounted for over 90 percent of the company’s revenue. Plaintiffs allege that the offering documents failed to disclose the fact that Missfresh’s business model was fundamentally unsustainable at the time of the offering. Defendants moved to dismiss the amended complaint in its entirety. See Dkt. 42. After full consideration of the parties’ written submissions, this Court issued a “bottom-line” order denying defendants’ motion with respect to the first set of claims outlined above, but granting defendants’ motion in all other respects. This Opinion sets forth the reasons for those rulings. I. Background Missfresh is a Chinese technology company that sold groceries in China through its mobile application. Its primary line of business utilized a distributed mini warehouse (“DMW”) model that enabled it to deliver groceries from its thousands of small warehouses to customers within an hour of an order being placed. Amended Complaint (“AC”)
7, 54 (Dkt. 34). In addition to its DMW business, the company offered a wider variety of products through its next-day delivery business. AC 55. These two business units collectively accounted for well over 90 percent of the company’s revenue. AC
